Turkey's yearly inflation rate rose less than expected in June, hitting 8.86% versus the estimated 9.1%. While annual inflation was up from May, monthly inflation declined as expected. This suggests Turkey's central bank may meet its year-end inflation target and shift to a looser monetary policy to boost economic growth, which has slowed significantly from 2011 levels. The central bank governor has varied interest rates daily and employed an unconventional policy since October to support the currency and reduce one of the highest inflation rates among emerging markets.

1. Turkish Inflation Hits Estimations
Turkey’s yearly rate of inflation arose to a lesser degree anticipated in June, indicating that the central
bank might fulfill its year-end inflation estimate and shift to a looser monetary policy to encourage
development. The 8.86% growth in consumer prices last month hit the 9.1% estimation by economists
surveyed by Dow Jones Newswires. While annual inflation accelerated from 8.27% in May, monthly
inflation fell 0.8%, hitting market anticipations of a 0.5% drop. A looser monetary policy would support
the Turkish government’s 4% yearly economic growth aim, less than half the 2011 expansion of 8.5%,
which was second only to China among the world’s major economies.
Turkey’s GDP enlarged 3.2% in the first 3 months of 2012, when compared with 11.8% in the first
quarter of last year. Turkey’s resilient economy stands in direct contrast with those of most neighbours
in the EU, particularly in Greece, whose leaders have called on their citizens to emulate the success of
Athens’ old rival in getting over from economic hardship. Turkey’s central bank governor has been
altering rates daily from 5.76% to 11.4% since October, applying an unorthodox monetary policy to
back up the currency and to rein in one of the highest rates of inflation among emerging markets. The
central bank cut bank borrowing costs to a two-month low of 8.4% today from as high as 10.1% on
June 5.
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