Slowing inflation to single digits for the first time in a generation has been one of two key pillars of Turkey’s economic rescue package, the other being strict fiscal discipline. In concluding a draft agreement to provide a new three-year $10bn loan, the International Monetary Fund described the taming of inflation as one of the major policy successes of the past three years, paying tribute to the independence and effectiveness of the Central Bank of the Republic of Turkey (CBT).
Consumer price rises peaked at 68.5% in 2001, progressively slowing to a single-digit rise recently. Full-year inflation for 2004 is set to average 12%. This was achieved partly by monetary tightening but just as much, if not more, by the operational effectiveness of the CBT, which gained unprecedented independence with the new Central Bank Law of 2001.
