Inflation targeting and transparency: The case of Turkey

Transparency can be defined as the disclosure of all necessary information on monetary policy to economic agents. Thus, information asymmetry between the public and the policy maker can be removed and policy activity can be enhanced. The transition to the inflation targeting strategy as a result of the struggle with high inflation rates and expectancy of economic agents becoming important in the monetary policy has led central banks to take further steps towards transparency. In this study, using Geraats and Eijffinger's transparency index holds an important place in the literature calculated level of transparency of the Central Bank of the Republic of Turkey and investigated how to have an impact on the consumer price index expectations at different time horizon. In our analysis, transparency of the Central Bank of the Republic of Turkey was concluded to be effective in both the short and long-term expectations in the consumer price index.