The impact of Central Bank policy interest rates on macroeconomicindicators in Türkiye (2014-2024)

Sahin Cetinkaya
Additional contact information
Sahin Cetinkaya: Aksaray University, Türkiye

Review of Socio - Economic Perspectives, 2025, vol. 10, issue 2, 41-57

Abstract: Money markets are among the most influential factors affecting macroeconomic indicators. Central banks manage these markets through various monetary policy instruments, the most significant of which is the interest rate. Since 2018, Turkey has pursued a markedly different monetary policy path, which has drawn diverse reactions from both domestic and international economic authorities. This study examines these responses in chronological order.In economic theory, the relationship between interest rates and inflation has been discussed from various perspectives. The generally accepted view is that raising interest rates reduces inflation, while lowering them increases it. However, Turkey’s recentmonetary policy has been shaped by an approach that runs contrary to this conventional understanding.The impact of interest rate policy on exchange rates has been predominantly upward. Rising exchange rates have increased the prices of imported goods, thereby driving up costs. This effect has been particularly pronounced in the fuel market, where Turkey’shigh dependency on imports led to price increases of more than 100 percent. Given the widespread reliance on road transportation, higher fuel prices significantly raised transport costs, resulting in severe cost-push inflation.The analysis investigates the relationship between interest rate changes and key macroeconomic indicators such as inflation, foreign trade, economic growth, and GDP. The findings reveal a strong correlation between interest rates and many of these macroeconomic variables.

Keywords: Interest Policy; Central Bank; Economic Growth; Inflation; Exports; Current Account Deficit (search for similar items in EconPapers)
JEL-codes: E31 E43 E58 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://reviewsep.com/index.php/rsep/article/view/273/358 (application/pdf)
https://reviewsep.com/index.php/rsep (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aly:journl:202360

DOI: 10.2478/rsep-2025-0013

Access Statistics for this article

Review of Socio - Economic Perspectives is currently edited by Veysel KAYA

More articles in Review of Socio - Economic Perspectives from Reviewsep
Bibliographic data for series maintained by Veysel KAYA ().