Turkey’s double-digit inflation rate slipped back from an eight-year high last month in welcome news for a central bank that has been fighting a falling currency this year.
Annual inflation dipped to 11.72 per cent in May from 11.87 per cent – still far in excess of the central bank’s near 5 per cent target but down from its highest level since 2009. Turkey’s central bank has been raising interest rates this year in a bid to tame inflation by helping support the currency.
Having started the year as the world’s worst performing emerging market exchange rate, the lira has regained a footing to gain 0.8 per cent against the dollar so far this year. It is up nearly 8 per cent since March.
The central bank will be meeting for its latest policy decision on June 15, where policymakers are widely expected to raise the country’s liquidity window rate after lifting it to 12.25 per cent in April.
The lira is 0.2 per cent stronger at TRY3.50 at publication time.