Analysis of the CBRT's monetary policy stance and its impacts after the 2008 Global Financial Crisis

Monetary policy is defined as a set of established strategies to affect the availability and cost of money, in order to achieve goals such as economic growth, employment growth and price stability. These decisions taken to reach these targets are implemented by central banks. The main purpose of many central banks that determine monetary policy is to ensure price stability within the scope of fight against inflation and to maintain this stability. Accordingly, the main purpose of the CBRT is to ensure price stability and the monetary policy instrument used to achieve this goal is short-term interest rates. However, price stability alone was not sufficient to ensure economic stability after the 2008 global financial crisis. Financial stability is also included in the objectives, with price stability being the main target, and new non-traditional monetary policy instruments have been introduced, with the exception of short-term interest rates. The aim of the study is to reveal the factors that affect the objectives of the CBRT after the period when the non-traditional monetary policy started to be implemented. In the study, three different models were established, representing the CBRT's objectives: price stability, financial stability and growth. Different independent variables, which are thought to affect the dependent variable, were selected for each purpose included in the models as dependent variables. In the analysis, firstly, unit root test, ARDL boundary test and variance decomposition calculation were made as methods. The time period covers the period of 2010-2018 and the data used are handled monthly. As a result of the analysis, the most influential variables on price stability, the first model, were inflation itself, expected inflation and credit expansion. The variables that have the greatest impact on the second model financial stability were CDS, credit expansion and US 2-year treasury bonds. Finally, it was found that the variables that have the greatest impact on third model growth are the industrial production index, public expenditures and expected inflation.