Monetary policy practices within the framework of neo-liberal economic policies in Turkey

This study examines the evolution of monetary policy practices in line with neoliberal principles in Turkey since the 1980s. It has been emphasized that with the rapid spread of financial and economic globalization, the objectives of monetary policy, the role of politicians in the formation of monetary policy and the central bank-government relations have been restructured in the direction of neo-liberal policies. It has been highlighted that with the transnationalization of finance, the values and priorities of international finance capital began to be privileged and the target of monetary policy implemented in Turkey has shifted to stabilize the interest rates and foreign exchange rates instead of economic growth. It has been argued that monetary policy with the sole objective of maintaining price stability ignores other economic policy objectives such as income growth, industrialization, and unemployment. It has been expressed that Turkey has become more vulnerable to external shocks due to the expansionary monetary policies implemented by developed countries in the aftermath of the global financial crisis. It has thus been suggested that while struggling with inflation, the Turkish central bank should implement monetary policy in a way that ensures competitive real exchange rates and helps alleviating urgent problems of the economy such as unemployment and external deficits.