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Interest Rate Corridor and the Monetary Policy Stance
[Faiz Koridoru ve Para Politikasi Durusu]

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  • A. Hakan Kara

Abstract

[EN] Central Bank of Turkey (CBT) has been implementing a multi-instrument monetary policy strategy within a wide interest rate corridor since 2010. In this approach, composition of the central bank liquidity provision is an important component of the policy stance. Therefore, interpreting the changes in the monetary policy decisions necessitates an understanding of the practical implementation of monetary policy. By presenting a simplified exposition of the CBT’s operational framework, this note aims to answer questions such as (i) How are the short term interest rates determined? (ii) What is the implication of a change in the funding composition? (iii) Which interest rate is more relevant for the monetary transmission mechanism? We attempt to address these questions to provide some insight into the assessment of the monetary policy stance.

Suggested Citation

  • A. Hakan Kara, 2015. "Interest Rate Corridor and the Monetary Policy Stance [Faiz Koridoru ve Para Politikasi Durusu]," CBT Research Notes in Economics 1513, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:econot:1513
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/58c3c596-b5c7-4fa5-bde9-77f2fddb5de1/en1513eng.pdf?MOD=AJPERES&CACHEID=ROOTWORKSPACE-58c3c596-b5c7-4fa5-bde9-77f2fddb5de1-m3fw5mB
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    4. A.Hakan KARA, 2012. "Küresel kriz sonrası para politikası," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(315), pages 09-36.
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    Cited by:

    1. Baris Soybilen & Burak Alparslan Eroglu, 2019. "Time-Varying Taylor Rule Estimation for Turkey with Flexible Least Square Method," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 33(2), pages 1-20.
    2. Hakan Kara, 2016. "A brief assessment of Turkey's macroprudential policy approach : 2011–2015," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 16(3), pages 85-92.
    3. Eda Gulsen & Hakan Kara, 2020. "Formation of inflation expectations: Does macroeconomic and policy environment matter?," Koç University-TUSIAD Economic Research Forum Working Papers 2017, Koc University-TUSIAD Economic Research Forum.
    4. Gül, Selçuk & Taştan, Hüseyin, 2020. "The impact of monetary policy stance, financial conditions, and the GFC on investment-cash flow sensitivity," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 692-707.
    5. Serdar Varlik & M. Hakan Berument, 2020. "Monetary policy under a multiple‐tool environment," Bulletin of Economic Research, Wiley Blackwell, vol. 72(3), pages 225-250, July.
    6. Hakan Kara, 2016. "Turkey's experience with macroprudential policy," BIS Papers chapters, in: Bank for International Settlements (ed.), Macroprudential policy, volume 86, pages 123-139, Bank for International Settlements.
    7. Neslihan Turguttopbas, 2017. "Perspectives on Monetary Policy and Cost of Capital: Evidence from Turkey," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 6(2), pages 45-64.
    8. Siklar Ilyas & Akca Aysegul, 2020. "Exchange Market Pressure and Monetary Policy: The Turkish Case," Ekonomika (Economics), Sciendo, vol. 99(1), pages 110-130, June.

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