ISTANBUL Reuters Turkish Central Bank Governor Sahap Kavcioglu said on Friday the policy rate will be set above actual and expected inflation , according to two sources who are participating in the banks investor meeting.

In his speech, Kavcioglu said the benchmark rate will be kept above inflation until strong indicators pointing to a lasting fall and the central bank reaches its 5 mediumterm target, according to one of the sources.

Kavcioglu also said the bank maintained its outlook for inflation to show a marked fall at the start of the fourth quarter at the latest, sources said. The policy rate currently stands at 19.

Turkeys inflation unexpectedly fell to 16.59 in May due to the COVID19 lockdown, but according to a Reuters poll it is expected to rise to 17 again in June. The data is scheduled for release on July 5.

The Turkish lira has lost more than 14 of its value so far this year, triggering inflation through imported goods. The central banks yearend inflation forecast stands at 12.2, still well below market expectations.

Reporting by Can Sezer and Ali KucukgocmenWriting by Ezgi ErkoyunEditing by Daren Butler and Louise Heavens

Source Reuters