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(Bloomberg) — Turkish inflation cooled for the first time since the outbreak of the Iran war, aided by a drop in energy prices.
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Consumer prices rose 32.1% in June in annual terms, down from 32.6% the prior month and matching expectations in a Bloomberg survey of 21 economists.
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The figures released Friday by TurkStat break with two consecutive months of accelerating inflation as Turkey, a major oil and natural gas importer, was hit by a surge in energy costs after the Strait of Hormuz was effectively closed.
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Monthly prices slowed, as expected in the survey, to 1%.
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Monetary policymakers have faced mounting pressure from businesses and banks over the slow pace of disinflation. Interest rates have held near 40% for much of the last year while progress reining in inflation stalled.
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To limit the secondary effects of energy driven inflation, the central bank paused its rate-cutting cycle in March and delivered what amounted to a veiled hike. It has since funded banks at a costlier rate of 40%, rather than its main policy rate of 37%.
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Governor Fatih Karahan told investors in London last month that the central bank did not consider shifting funding back to 37% before its next rate-setting meeting, Bloomberg reported.
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Still, some bankers and economists expect policymakers to reduce the funding rate from 40% in the July meeting, citing falling oil prices, even as the bank maintains a cautious stance.
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Most economists see inflation ending the year slightly under 30% — a more pessimistic outlook than the central bank’s forecast of 26%.
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