Turkey's high inflation due to global factors, not monetary policy - CB .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} The high inflation Turkey faced in 2007 and 2008 was due mostly to global factors rather than the Turkish Central Bank's monetary and exchange rate policies, the bank's governor Durmus Yilmaz said on Tuesday. The bank would trim the range between lending and borrowing rates if the liquidity tightness lasts, he added.

The main source of factors blocking a decline in the country’s inflation between 2006-2008 are seen as coming from developments that were out of central bank's control, Durmus Yilmaz said at news conference on the bank’s monetary and exchange rate policy for 2009.

"The first shock Turkey faced with its inflation targeting policy was in May 2006 when the global capital conditions started to worsen affecting emerging markets, and capital outflow was seen in many countries including Turkey," said Yilmaz, adding that from 2007, the rise in oil and the other commodity prices in global markets were further reasons.

Turkey's central bank will trim the range between lending and borrowing rates if liquidity tightness lasts, he also said adding that the bank would make a 'technical' rate cut if needed, which economists say means a cut in the lending rate.

The central bank's monetary policy committee meets on Dec. 18 to decide on rates. A Reuters poll of analysts expect the bank to cut its benchmark borrowing rate by 50 basis points to 15.75 and its lending rate by 100 bps to 17.75 percent.

Turkey's economic growth hit a six-year low in the third quarter, official data showed on Monday, boosting the chances of a cut in interest rates to stimulate the economy. Inflation has also started to ease.

Yilmaz told a news conference in outlining monetary policy for 2009 that the central bank would make one-week repo rates reference rates if liquidity tightness lasted.

He said the bank saw 'significant uncertainties' in liquidity conditions in 2009, although tightness would be moderate in the first-quarter.

Turkey's government has invited the International Monetary Fund for talks in early January on a possible loan agreement which is expected to boost Turkey's access to funds at a time of global financial crisis.