Interest Rate Corridor and the Monetary Policy Stance

Faiz Koridoru ve Para Politikasi Durusu

Hakan Kara

CBT Research Notes in Economics from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

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.

Date: 2015
New Economics Papers: this item is included in nep-ara, nep-cba, nep-cwa, nep-mac and nep-mon
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:tcb:econot:1513

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