Turkey

Turkey had a long period of incoherent policy, with some improvements in its monetary instruments in the 1990s, then moved to inflation targets from 2002 but struggled to meet those targets on a consistent basis and in some years its framework has to be reclassified as loosely structured discretion.

Years Targets and attainment Classification
1974-88 exchange rate adjusted frequently (more fixed than targeted); monetary policy operated mainly through direct instruments; strong element of fiscal dominance; 1986-88 monetary targets repeatedly missed; lack of clarity over objectives, with repeated returns to expansion before inflation fully controlled unstructured discretion UD
1989-2002 exchange rate more market-determined; central bank now operating more through indirect instruments; but objectives less than coherent, recurring fiscal dominance; first inflation target 2002 well undershot loosely structured discretion LSD
2003-5 wide informal/implicit inflation targets (+/-2% band) hit loose inflation targeting LIT
2006-8 wide formal inflation targets overshot, no evidence of expectations remaining anchored loosely structured discretion LSD
2009-13 wide inflation targets met except for 2011, when expectations remain partly within band loose inflation targeting LIT
2014 wide inflation target well overshot, and expectations well above band loosely structured discretion LSD

Selected IMF references: RED 1985 section III.1; RED 1990 pp1-2, 22-23, 31; SR 2004 pp4, 26, 40; SR 2013 pp11-12; SI 2014 pp11-18; SR 2014 pp16-19.

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