ANKARA, Jan 26 Reuters Turkey39;s central bank stuck to its forecasts for a sharp drop in inflation on Thursday, saying the increasing predictability of the lira39;s exchange rate plus financing support meant there was no longer the basis for large price rises.

Presenting a quarterly economic report, the bank39;s Governor Sahap Kavcioglu stood by previous yearend annual inflation forecasts for 2023 and 2024 of 22.3 and 8.8 respectively.

While most mainstream economists expect Turkey39;s inflation, which hit a 24year high of 85 back in October and was 65 in December, to continue to cool in the coming months, they see it staying well above the central bank39;s projections.

The median estimate for inflation at end2023 in the latest Reuters poll was 42.5, for example, and 26.4 for 2024.

Kavcioglu, who has slashed interest rates from 19 to 9 over the last year, said data were confirming the slowdown and monthly rates were getting closer to historical averages too. Pricing behaviour should follow, he added.

In an environment where cost shocks are fully reflected, predictability has increased in exchange rates, company profitability has improved and financing costs are supported, there is no basis for the continuation of high price increases, he said.

The central bank39;s forecasts also show oil prices at 80.8 in 2023, slightly above its 79.3 forecast three months ago.

The fact they are continuing to show confidence that inflation will fall sharply does not surprise…