Exchange rates key in Turkish economy, shaping monetary policy decisions.
The study looked at how monetary policy affects the Turkish economy. They found that changes in exchange rates have a bigger impact on the economy than changes in interest rates. Interest rates still play a role in controlling exchange rates. Exchange rates affect how much foreign debt banks hold and how much credit is available. Foreign debt and credit growth also influence industrial production. Overall, the study suggests that exchange rates are the most important channel through which monetary policy decisions affect the real economy in Turkey.