From exchange‐rate stabilisation to inflation targeting: Turkey's quest for price stability

This chapter discusses the experience of Turkey with inflation targeting (IT). The author explains how the monetary policy regime was changed in response to the collapse of the exchange‐rate peg in 2001 and how inflation targeting was adopted. She discusses how the preconditions for formal IT were fulfilled, and how these achievements helped to lower inflation at single digits. The move to formal IT in 2006, as well as the institutional changes it entailed, is also discussed in the chapter, as well as the successes and challenges the monetary authorities were confronted with within this new policy regime. The chapter concludes with an assessment of the lessons to be drawn from Turkey's experience with IT.