Central Bank in Turkey

Central Bank in Turkey

  • Submitted By: mcavoy
  • Date Submitted: 11/04/2013 1:10 AM
  • Category: Business
  • Words: 6368
  • Page: 26
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(Updated and revised as of July 2002)

August 2002



Outline of Presentation
Monetary Policy Framework – Exchange Rate Regime Monetary Policy Strategies
Assumptions, Communication – Accountability, Transparency, Interest Rates Policies, Monetary Targets, Inflation Targeting

Current Situation and Expectations in Economy
Stability Indicators, Price Stability and Growth, Balance of Payments, Monetary Targets

Price Developments
January – June developments, price movements in the future

Outlook for Exchange Rate Policy Outlok for TL Policy

Monetary Policy Framework Exchange Rate Regime
Characteristics of the 2000 Monetary Policy and Exchange Rate Regime
 It was based on a fixed currency peg exchange regime, daily

values of which being predetermined,
 The Central Bank’s influence over short-term interest rates

were limited.
While the Central Bank assumed the exchange rate risk, the interest rate risk was borne by market.
 A gradual transition to floating exchange rate regime was


Monetary Policy Framework Exchange Rate Regime
Under the free floating exchange rate regime;
 The Central Bank’s control over short-term interest rates has

been increased.
 Level of exchange rate has started to be determined

according to the supply-demand conditions of markets.
 In other words, while the Central Bank has begun giving

strong signals regarding short-term interest rates, the level of exchange rate has been left at the discretion of markets.


Monetary Policy Framework Exchange Rate Regime
There are some advantages and disadvantages in both exchange rate regimes. Under fixed exchange rate regime; Exchange rate, a variable that the public opinion can follow daily, is an effective anchor in steering expectations. Moreover, there is strong correlation between inflation and exchange rate. Central Bank has no control over short-term interest rates....

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