Central Bank in Turkey

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MONETARY POLICY IN 2002
(Updated and revised as of July 2002)

August 2002

CENTRAL BANK OF TURKEY

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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
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Monetary Policy Framework
Exchange Rate Regime
Characteristics of the 2000 Monetary Policy and
Exchange Rate Regime
 It
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To ensure accountability, the CBT provides information to the public, to the Parliament and to the Government periodically regarding monetary policy implementation.

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Monetary Policy Strategy - Transparency
Increasing transparency makes monetary policy more predictable, more effective and more credible in order to attain the final objective. Expectations become more sensitive to the Central
Bank’s decisions.
 Political transparency: Clear-cut goals; inflation targets,
 Transparency in monetary policy: Written announcements such as change in short-term interest rates,
 Operational transparency: Openness in interventions in markets and policies,

 Economic transparency: Quarterly Monetary Policy Reports,
Annual Report, Auditing Reports, which evaluates past performances and future expectations.
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Monetary Policy Strategy – Interest Rates
The CBRT takes its decisions by looking into the future inflation within the framework of its fundamental objective of achieving price stability. To bring down risk premium and therefore real interest rates, it is important to ensure that
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Priority is given to inflation targets and forecasts only,

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A sustainable economic growth and a rise in employment are secured. As in the past, targeting other subjects such as balance of payments, exchange rates, gowth, public finance, banks will provide mixed signals to economic agents. In this case, risk
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