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Turkish August inflation tops policy rate level of 19 percent

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Turkish annual inflation stood at 19.25 percent in August, official data showed on Friday, above a poll forecast of 18.7 percent and the central bank’s policy interest rate level, 19 percent, Turkish media reported.

Month-on-month, consumer prices rose 1.12 percent, the Turkish Statistical Institute (TurkStat) said.

In double digits for most of the last four years and now at its highest level since April 2019, inflation has been pushed higher in recent months by lira weakness and depleted monetary policy credibility after President Recep Tayyip Erdoğan sacked hawkish central bank governor Naci Ağbal in March.

The central bank’s policy rate stands at 19 percent, and the bank has pledged to keep rates above inflation. It last changed the rate in March when Ağbal raised it to head off inflation.

At 0937 GMT, Turkey’s lira stood at 8.3301 against the US dollar after the data were released — 0.53 percent weaker than yesterday’s close.

The bank kept the rate steady last month and raised its year-end inflation forecast to 14.1 percent last week, still below market expectations, as the bank’s governor predicted inflation would fall significantly in the fourth quarter.

Annual inflation stood at 18.95 percent in July and 17.53 percent in June. The official inflation target is 5 percent.

The producer price index saw an annual rise of 45.52 percent, the data showed.

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