CB head predicts new inflation target for 2009

Meeting yesterday with business editors of leading newspapers, Central Bank President Durmus Yilmaz said that this year's inflation target, 4 percent, won't be revised, but that the CB would submit a new inflation target for 2009 during fall budget debates. Stating that this new target would be 9.3 percent, he said, "All economic actors should adjust their plans to this new target." Yilmaz also said that the economic problems facing Turkey should be overcome without damaging the country's potential for medium- and long-term growth. Stressing that tight fiscal policy had helped Turkey's disinflation drive enormously, he said if there's any relaxation in that policy the CB would raise interest rates to keep inflation low. Asked about the case seeking the closure of the ruling Justice and Development Party (AKP), Yilmaz said, "The case has hurt the economy, but we haven't talked about this so much publicly, to avoid further harm." He added that the CB will swiftly change its monetary policy if it sees any threat to price stability. Rejecting claims that he has had problems with the government, he said, "The government and I have worked in harmony so far and we will continue to do so."