World Bulletin / News Desk
The bank's previous forecast for 2014 inflation was 5.3 percent.
Before announcing the bank´s inflation forecast, the governor said that the outlook for the global economy seems poor.
At a news conference announcing the bank's quarterly inflation report in the capital Ankara, Basci said nobody should be in doubt that the bank will use all available policy tools to meet its 5 percent inflation target.
“Inflation is to be between 5.2 percent and 8 percent by the end of 2014,” Basci said. “Inflation is to be between 3.1 percent and 6.9 percent at end of 2015.”
On Monday, Turkey's Central Bank called a Tuesday interim meeting with its Monetary Policy Committee, following a sharp decline in the Turkish lira against the US dollar and the Euro.
The US dollar hit a historic high against the Turkish Lira in mid-January, prompting Turkey's Central Bank to intervene, for the first time in two years, by selling US dollars.
Basci said that the recent developments in the currency volatility had prompted the decision to hold an interim meeting with its Monetary Policy Committee on Tuesday.
Basci said the interim meeting of the Monetary Policy Committee, which could review all interest rates, has been delayed until later on Tuesday due to absence of member.
The decision will be announced at midnight on Tuesday, local time.
Last Tuesday the committee chose to leave the one-week repo rate (policy rate) unchanged at 4.5 percent, and decided to keep the overnight interest rates the same, with the borrowing rate at 3.5 percent and the lending rate at 7.75 percent. The committee also planned to increase the rate on extraordinary days from 7.75 percent to 9 percent.
The governor also said that that political approval or criticism was not an obstacle to central bankindependence. He said: "The bank won't abstain from implementing permanent monetary policy tightening if needed.”
Basci also added that Turkey´s December current account deficit will be higher than expected, but will return to normal in January.
According to weekly Central Bank figures, the bank's gross foreign exchange reserves were down by $2.83 billion to $106.87 billion as of January 17.