Turkey’s inflation falls by 0.41%

Turkish consumer prices fell 0.41 per cent month-on-month in July, larger than the forecast drop of 0.07 per cent, the Turkish Statistics Institute said on Wednesday. The index rose 6.31 per cent year-on-year.Producer prices fell 0.03 per cent on the month, compared with a forecast rise of 0.80 per cent. The index rose an annual 10.34 per cent.The data was released shortly after Turkey’s central bank, battling a huge current account deficit and weakening lira, said it would hold an interim policy meeting on Thursday to assess concerns over the euro zone’s debt problems and global growth.The yield on the benchmark May 15, 2013 benchmark bond fell to 8.66 per cent after the inflation data from 8.71 per cent beforehand. Last week Central Bank Governor Erdem Basci said further lira depreciation could push up prices, but the bank held its 2011 and 2012 inflation forecasts steady and said it saw no reason to hike its policy rate.In its quarterly inflation report the bank maintained its year-end CPI forecasts at a mid-point of 6.9 per cent for 2011 and 5.2 per cent for 2012, and also kept its 2011 oil price assumption at $115.Since late last year the Central Bank has been following an unorthodox monetary policy based on lower interest rates to deter portfolio inflows and higher required reserve ratios to rein in domestic demand.The bank has been under pressure in recent months to abandon the policy which many analysts feel is simply not working and has left Turkey behind the curve in tackling inflation Turkey’s central bank, battling a huge current account deficit and weakening lira, will hold an interim policy meeting on Thursday to assess concerns over the euro zone’s debt problems and global growth, it said on Wednesday.The MPC, under fire from financial markets for refraining from more aggressive action to cool inflation and support the lira, will meet between 0700-0900 GMT and will announce its decision at 0900 GMT, the bank said in a statement.The lira firmed as far as 1.7120 against the dollar after the announcement from 1.7220 beforehand and was trading at 1.7170 at 0640 GMT. From / Gulf Today