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 converging inflation targeting LCIT|
|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|
|2014-17||wide inflation targets repeatedly overshot, and expectations repeatedly above wide target band; IMF calls for monetary policy normalisation, i.e. move to supplying liquidity to banks at single policy rate within interest rate corridor, and positive real policy rate||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; SR 2016 pp7, 19-20; SR 2018 p31.
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