Effect of Central Bank`s Short-Term Interest Rates in The Economy After 2008 Global Financial Crisis: The Case of Turkey

Authors : Havva ARABACI, Ayhan AYTAÇ

Pages : 241-248

View : 13 | Download : 6

Publication Date : 2019-09-01

Article Type : Research Paper

Abstract :The Central Bank tries to influence the level of money supply and demand in the economy in order to achieve price stability, which is its main objective. It uses short-term interest rates as the main tool in order to affect the money supply and demand conditions. The changes in short-term interest rates used by the Central Bank in trading with commercial banks may affect the lending costs of banks. The Central Bank is the institution responsible for the implementation of monetary policy in our country. Central Bank of the Republic of Turkey, with the revised Central Bank Act in 2001, is assigned to take measures to stabilize the financial system in addition to the primary objective of price stability. Since 2006 Central Bank of the Republic of Turkey in line with its main aim of price stability, switched to an inflation targeting regime, began to use short-term interest rates as the main policy tool. With this study, the effects of the Central Bank`s change in short-term interest rates on the economy after the 2008 global financial crisis, were tried to be explained.
Keywords : Central Bank of the Republic of Turkey, Primary Dealer Banks, Interest Rates