Research Catalog
The Challenges of Monetary Policy in Turkey
- Title
- The Challenges of Monetary Policy in Turkey [electronic resource] / Olcay Çulha, Ali Çulha and Rauf Gönenç
- Author
- Çulha, Olcay.
- Publication
- Paris : OECD Publishing, 2008.
Available Online
Details
- Additional Authors
- Description
- 38 p.; 21 x 29.7cm.
- Summary
- Monetary policy has been one of the main pillars of the post-2001 stabilisation programme. Encouraged by its success, the central bank shifted from implicit to explicit inflation targeting in 2006 and set a medium-term inflation target of 4%, applicable from end 2007. However this objective faced with two important challenges. On the one hand, inflation inertia settled in and non-tradable inflation stagnated at more than 10%, further fuelled by persistent surge in global commodity and energy prices. On the other hand, real interest rates remained high, continuing to fuel strong capital inflows and currency appreciation, and undermining the competitiveness of labour-intensive segments of the economy. Turkey is, therefore, faced with the classic dilemma of successful catching-up economies: Inflation inertia requires a tight policy while competitiveness losses appear to go beyond the absorption and adaptation capacity of large segments of the economy. This chapter argues that resolving this issue requires monetary policy to be supported by broader policies, including proactive competition policy to reduce costs and prices in services, enforcement of a credible multi-yearly spending framework to consolidate confidence in fiscal stability, and employers' and employees' commitment to anchor prices and wages more on the inflation target. Success with such policies would help shift the burden away from the central bank's interest rate as the only available instrument to increase the credibility of the inflation target.
- Series Statement
- OECD Economics Department Working Papers, 1815-1973 ; no.646
- Uniform Title
- OECD Economics Department Working Papers, no.646.
- Subject
- LCCN
- 10.1787/235327828370
- OCLC
- oecd-lib-004400
- Author
- Çulha, Olcay.
- Title
- The Challenges of Monetary Policy in Turkey [electronic resource] / Olcay Çulha, Ali Çulha and Rauf Gönenç
- Imprint
- Paris : OECD Publishing, 2008.
- Series
- OECD Economics Department Working Papers, 1815-1973 ; no.646OECD Economics Department Working Papers, 1815-1973 ; no.646.
- Connect to:
- Indexed Term
- EconomicsTurkey
- Added Author
- Çulha, Ali.Gönenç, Rauf.
- Other Standard Identifier
- 10.1787/235327828370 doi