The Republic of Turkey Central Bank's interest policy

Today Central Bank of the Republic of Turkey (CBRT) takes its place in the financial system not only due to transaction between banks but also its position to issue money on behalf of the government or interfere the economy. At the same time, as well as being the authority of monetary policy, it is in charge of being the principal investigator of inflation target. Especially since 2002, CBRT, which gained its independence, has applied interest as an instrument inevitably in order to reach its ultimate goal. So, this study aims to illustrate how CBRT determines the rate of interest that has an importance to get the macroeconomic goals besides assuring price stability. For this reason, the effect of money supply, index of industrial production, internal debt, exchange rate and inflation rate variables on inflation rate have been investigated in the scope of The Autoregressive Distributed Lag (ARDL) model by using 2008Q1 and 2019Q3 data. As a result, the findings indicate that CBRT determines the rate interest in parallel with short and long term price stability target