Central Bank in Turkey

In simple terms the monetary policy consist of different measures controls used in managing monetary variables such as money supply, credit supply,intrest rate. In order to achieve price financial system stability, with in the domestic economy. The monetary policy variables tend to be price levels, which influence real income, interest rate which affect the cost of production credit supply

This gathering of governor was joined by leading academics, thought leaders, and commentators on monetary policy. The world of modern central banking and global finance had now entered a new phase of even more obvious artificiality and distortions. According to the author, Mohamed. El-Erian, “Ones whose skillful management of the price and quantity of money in an economy was key to containing inflation, promoting economic growth, and avoiding financial crises.” Since the global financial crisis of 2008, central bank has ventured, by necessity but not by the choice. They set the interest rates higher. For an unusually prolonged period, the central bank was bold policy experimentation. During that time, many of the economists thought that central banks had been forced to operate, and many of them wondered about it consequences. From the beginning of the financial crisis, there was the hope that courageous and responsive central banks would succeed in handing off the baton to high growth, robust job creation, price stability, and financial system. The world was in the process of grow out of its debts problems avoiding the debt defaults because the policy making entities were finally in the economic governance responsibilities and with the job returning and economic prosperity. The world changed in two important ways: one had to do with the analytics of central banking,

The primary objective of the Monetary Policy of Bangladesh is to outline the formulation and implementation of monetary policy of the Bangladesh Bank (BB), and to convey its assessment of the recent and the expected monetary and inflation developments to the stakeholders and the public at large.

Examine the connection and the differences between the official exchange rate market controlled by the CADIVI and the permuta. Discuss the states of equilibrium in each of these markets. Central banks intervene in foreign exchange markets in order to achieve a variety of overall economic objectives, such as controlling inflation, maintaining competitiveness or maintaining financial stability. The precise objectives of policy and how they are reflected in foreign exchange market intervention depend on a number of factors, including the stage of a country‟s development, the degree of financial market development and integration, and a country‟s overall vulnerability to shocks. The precise definition of which operations in forex markets

Monetary policy rules are a fundamental part of the central bank models and are often refined to maximize economic welfare, specific to that country. Monetary policy rules are a methodical response of monetary policy events in the economy. Essentially, it can be thought of as a numeric equation, which determines the appropriate level for the central bank’s policy instrument to be a function of one or more economic variables that describe the state of the economy. It is imperative that economies model the reaction of their monetary authorities to changes in their respective economic conditions; this equation is essentially a “reaction function.” A reaction function utilizes its instruments to stabilize inflation and output

Monetary policy rules are a fundamental part of the central bank models and are often refined to maximize economic welfare, specific to that country. Monetary policy rules are a methodical response of monetary policy events in the economy. Essentially, it can be thought of as a numeric equation, which determines the appropriate level for the central bank’s policy instrument to be a function of one or more economic variables that describe the state of the economy. It is imperative that economies model the reaction of their monetary authorities to changes in their respective economic conditions; this equation is essentially a “reaction function.” A reaction function utilizes its instruments to stabilize inflation and output fluctuations in response to demand or supply shocks. In a macroeconomic environment, the policy rules a Central bank develops is essential and thus numerous monetary policy rules have been discussed throughout economic literature.

- The key monetary policy objective is to maintain price stability - In 2011, the country faced substantial inflationary pressure that was exacerbated by high international oil prices, drought conditions and exchange rate depreciation. - As a result, the rate of inflation increased to a peak of 19.72% in November 2011, prompting the Central Bank (CB) of Kenya to adopt a tight monetary stance. At that time, Central Bank Rate (CBR) was about 6.25%, therefore, to reduce the inflation rate, the CB of Kenya should increase the CBR up to 16-18% in December 2011. - From then, to balance out the economic outlook, the CBR should be slightly decreased till August 2012 the CBR should be about 13%. - The easing of the monetary policy is being in response to improve the inflation outlook. - If we increase the CBR, M2 will be increased but M1 will be decreased so that the price will drop and the inflation rate will decline. - But when we raise the interest rate too

Monetary policy is among the many tools used by a national government to manipulate its financial system. Monetary policy refers to the method used by the financial authority of any country to control the supply and availability of money (Woelfel, 1994). It is often targeted at interest rates to achieve lay down objectives directed towards economic growth and stability (Woelfel, 1994). Monetary policy rests on the link between interest rates in an economy, that is, the relationship between interest rates and the total money supply. It employs a variety of methods to control outcomes like inflation, economic growth, currency exchange rates and unemployment.

The way in which the decision-making process to manage monetary policy has been managed is a reflection of government policy and the desire to create an economy which will facilitate growth. The decisions regarding policy, including the price stability and interest rates are not made by one person, but by the monetary policy committee (Bank of England, 2007). The committee will meet monthly to examine the state of the economy, and take a vote as to whether interest rates should be changed, and which way they should be changed. The committee consists of professional experts who are qualified to make these decisions and assess the implications of their decision. The action take will be in line with a straightforward majority. The role of the monetary policy committee may be the maintenance of price stability, but they are obliged to do this within the government inflation targets (Bank of England, 2007). In addition to this the committee is also bound to support the government policy on employment and growth in the economy (Bank of England, 2007). Therefore the independence is limited in terms of the goal is set for them, but at least the way that they reach that goal appears to have a degree of discretion. In these meetings the treasury also has a right to be

This paper attempts to discuss and examine the importance and impact of monetary policy which is being conducted by a central bank in the country. The analysis covers the target of monetary policy in Malaysia. It also compares two monetary policy (interbank interest rate) which was conducted by central bank of Malaysia and fed funds rate which was practiced by Federal Reserve Bank of New York.

The Egyptian economy has been witnessing a series of economic and political reforms since the beginning of the 21st century. Starting from post-Gamal Abdel-Nasser’s era in 1990 several economic reforms and monetary policies have been implemented by the Central Bank of Egypt (CBE) and other economic institutions. The economic reforms started by the Economic Reform and Structural Adjustment Programme (ERSAP), offered by the International Monetary Fund (IMF), in 1991 with the aim of amending the economic imbalance of demand and supply sides within the economy, rebalancing the government budget deficit and stabilizing inflation rates. The ERSAP was followed by several monetary policies, such as the “float” of the Egyptian pound implemented in 2003 by the central bank, most of which were with the main purpose of inflation targeting and price stabilizing, since inflation has been one of the main economic issues facing Egypt and hindering it’s economic growth and development. The 2003 floating of Egyptian pound policy was a turning point in the Egyptian economy, allowing exchange rates to float freely after decades of manipulating the real exchange rates to keep the nominal Pound to Dollar exchange rates constant. Starting from the beginning of the 21st century several transforming events had occurred in the Egyptian economy, most notably the monetary policies implemented by the central bank in 2003 and 2005, with the main

It has been said that “money makes the world go ‘round,” but money alone is not efficient money at all. Money must be controlled, regulated, and agreed upon in order to work. Therefore, in all successful governments, there is a system in place to create a monetary policy. Monetary policy is the process in which a regulatory agency controls the supply of money. This control is usually focused on the goal of economic stability, but sometimes on full employment and economic growth. It is also used to create a sense of trust in the nation’s currency. There are two main ways to go about handling the supply of money, these policies are described as either expansionary or contractionary, depending on the current condition of a country.

After experiencing high inflation and interest rates and fluctuating growths in 1990’s, Turkey launched a new disinflation program in 1999. This new disinflation program, which was backed by IMF, aimed to decrease the inflation to single digit rates at the end of 2002 and intended to increase the public-sector primary balance to %3,7 at the end of 2000 (Yeldan September 2001). Inflation rate target was anchored to pre-announced crawling peg exchange rate regime and program projected a gradual move towards flexible exchange rate in July 2001. Public sector primary surplus aimed to be attained by implementing a tight fiscal policy including additional taxes and cuts in public spending (Akyüz and Boratav April 2002).

This paper aims to contribute to the literature on measuring the Central Bank Independence in Turkey. We see the need for a unique measurement for the CBI in Turkey as Turkey constitutes a special case among other countries with its inflation rates reaching 64% in 1980 's and 74% in 1990 's and dropping lower than 10% in 2000s.

2. However, the Act currently has twin objectives: price stability and growth. It does not define ‘monetary stability’ with precision, although Sections9 (a) and (b) do set out monetary policy formulation and objectives. These ambiguities have allowed the government to adopt different monetary policy frameworks at different times. To improve transparency, the IMF has recommended to the Pakistani authorities that the SBP Act be amended to define the term more clearly and to