Turkish inflation accelerated at a slower pace than expected last month, beating all economists’ expectations and prompting banks including Morgan Stanley to cut their forecasts. Bonds jumped.

June inflation climbed to 8.9 percent from 8.3 percent in May, the statistics agency in Ankara said on its website today. The figure was less than all estimates in a Bloomberg survey of nine economists and beat an average prediction of 9.5 percent. Prices fell 0.9 percent in the month.

“The biggest uncertainty now is whether annual consumer price inflation will rise back to double digits in the summer, but we think the central bank will maintain its tight monetary policy in order to avoid that,” Ozgur Altug, chief economist at BGC Partners in Istanbul, said in an e-mailed report to clients.

Central bank governor Erdem Basci has mixed funding to banks between rates of 5.75 percent and 11.5 percent on a daily basis since October to tame inflation and rein in the current- account deficit, while keeping economic growth intact. The policy has helped Turkish bond yields fall 268 basis points this year, making them the second best-performing bonds in emerging markets, trailing only Brazil. The central bank’s average lending rate was 8.74 percent yesterday.

Businessweek