ISTANBUL (Reuters) – Turkey’s central bank is expected to revise its inflation forecasts sharply higher today, but economists expect it to hold to a 4 percent year-end target despite a current inflation rate of some 9 percent.

In its last report at the end of January, the bank said there was a 70 percent chance that inflation would end the year at 4.1-6.9 percent, with a midpoint of 5.5 percent.

Latest data showed the consumer price index rose an annual 9.15 percent in March.

The Monetary Policy Committee started cutting rates in September and cut six times before holding steady in March and April, when it said it could raise rates if necessary.

“I expect it to make a serious upward revision to the inflation forecasts and underline more strongly the line from the April 17 MPC statement that they ‘could raise rates in a measured way if necessary,’” said HSBC economist Murat Ulgen.

In January, the bank said it forecast end-2009 inflation at 1.8-5.5 percent, with a mid-point of 3.7. The bank tends to give forecasts for one and two years ahead, so today it will likely forecast as far as the first quarter of 2010.

Ulgen said that the two-year forecast would be more important, and he expected it to be above 4 percent.

Food and oil prices have fueled inflation in Turkey, as they have elsewhere, and a 9 percent fall in the lira’s value this year adds to the pressure. According to the central bank’s latest external expectations survey, inflation is seen ending the year at 8.44 percent and at 7.04 percent 12 months hence.

“This revision (to the bank’s inflation forecasts) is going to determine the future of monetary policy. A very aggressive revision would increase the chances of a rate hike in the coming period,” said Yarkin Cebeci, an economist at JP Morgan.

The bank continues to target year-end inflation of 4 percent, after missing the target last year and the year before.

While some economists said it would be understandable for the bank to change the target, they did not expect it to do so.

They said any revision to the target would most likely come in the context of a new International Monetary Fund program. Turkey’s $10 billion loan program expires next month and the government has still to announce what will replace it.