Turkey’s inflation to remain flat in May

The state-run Anadolu news agency poll showed that the average estimate of 14 economists expect Turkey’s consumer price inflation at 17.2 percent in May versus 17.1 percent realized in April. Given the 17-day lockdown during May, the CPI inflation reading could as well be misleading.

Currently the central bank policy rate is at 19 percent. 

Central Bank governor Şahap Kavcıoğlu, appointed in March, said last month that inflation probably peaked in April and will slow down markedly in the second half of the year, giving room for rate cuts. But higher global commodity prices and the weaker lira are throwing that prediction into doubt, according to some investors. The central bank says it will set interest rates according to actual inflation and expectations for future price increases. Its monetary policy committee will next meet on rates on June 17.

The Turkish Statistical Institute is due to announce May inflation data on Thursday.

The lira fell to a record low of 8.61 per dollar on Friday, taking losses to 16 percent since mid-March, when President Erdogan sacked Kavcıoğlu’s more hawkish predecessor. The currency was trading at 8.50 per dollar on mid-Monday.