ISTANBUL (Hurriyet)–Turkey’s inflation rate fell for the sixth time in seven months in May as the economy contracted, giving the central bank room to reduce record low interest rates even further.
Inflation eased to 5.2 percent from 6.1 percent the month before, the slowest since July 1970, the statistics office in Ankara said on its Web site Wednesday. In the month, prices rose 0.6 percent.
The Central Bank forecast on April 29 that this year’s contraction in the economy triggered by the global crisis would allow it to “maintain an easing bias for some time.”
The bank has shaved 7.5 percentage points from the benchmark rate in seven months, taking it to a low of 9.25 percent. “I think the bank will cut by another quarter point this month and then that will be it,” according to Yarkın Cebeci, an economist for JPMorgan Chase in Istanbul.
“Inflation of around 5 percent could be the bottom, because there’s likely to be a pick-up starting from the summer as energy and commodity prices may rise,” said Cebeci.