Central Bank confident inflation to near 5 percent targent next year

Central Bank of Turkey Governor Erdem Basci has said Turkey is likely to have an inflation rate close to the targeted 5 percent next year as the upward pressure that emerged from a weaker Turkish lira and higher commodity prices eases. In a press conference he held on Tuesday in Ankara to discuss the bank's monetary and exchange rate policy in 2012, Basci also said the targeted inflation rates for 2013 and 2014 would also be set at 5 percent in line with the government's Medium-term Economic Program (OVP). As part of his speech Tuesday, Basci also noted that a central bank's monetary policy cannot be flexible and predictable at the same time in absolute terms, but it is certainly possible in relative terms, and this is what his bank is going to do next year. "As you all know, 2011 was a year during which both flexibility and uncertainty were intentionally increased. However, 2012 for us will be year when monetary policy predictability is raised with its flexibility is preserved," the chief banker said. To that end, he pointed to the need for an effective communications strategy on the part of the bank. "I want to share with you that we are planning to implement some changes that will increase the effectiveness of our communications policy," Basci said. As part of that improved communications strategy, the bank will continue to issue its quarterly inflation reports and announcements related to the monthly meetings of its Monetary Policy Committee (PPK). On Tuesday, Basci also elaborated on how important it is for the Turkish central bank to ensure and maintain the country's financial stability which was made one of its core duties with a legislative amendment in 2001. He said the bank will continue, as has been the case in 2011, to focus on financial as well as price stability in Turkey.