A Workshop on Inflation Targeting was held on May 9-10, 2008 in the city of Izmir, Republic of Turkey. It was participated by experts from Afghanistan, Iran, Kazakhstan, Turkey, International Monetary Fund (IMF), Bank of England and the Central Bank of Chile along with the representatives of ECO Secretariat.
The Workshop was jointly inaugurated by Mr. Durmus Yilmaz, Governor, Central Bank of Turkey and Mr. Waqar Ahmad Shah, Director (Trade and Investment) of ECO Secretariat.
The Governor briefed the participants about the Turkish experience of Inflation Targeting. He stated that this experience was quite noteworthy in terms of understanding the successes and failures in achieving price stability at a time of globalization, massive capital flows and persistent supply shocks. He informed that by the end of the third quarter of 2007, the headline inflation came down to 7 percent and non-food inflation fell below 5 percent. However, the persistent elevation of prices due to external shocks since March 2008, have started feeding into inflation expectations and there are still some challenges, Turkey has to face.
Director Trade and Investment of ECO Secretariat highlighted the overall average inflation rates of ECO region, the highest being in the year 2000, when it soared to 23.9% and lowest recorded at 9.1% in 2005. In 2007, the regional average rate of inflation stood at 10.26%. He informed that among the ECO Member States, the Islamic Republic of Iran, the Republic of Azerbaijan and the Republic of Uzbekistan experienced double digit average inflation rates of 19%, 16.6% and 12.2% respectively in 2007. During the year, the lowest annual average inflation rates were maintained by Turkmenistan (6.5%), Kyrgyzstan (7.0%) and Pakistan (7.8%). Remarkable achievement has, however, been made by the Republic of Turkey which has successfully brought down annual inflation rates from 68.5% in 2001 to 7% in 2007. He suggested that the case study of Turkey, being the only ECO Member State having successfully implemented inflation targeting as an instrument of monetary policy, and adoption of similar strategy will be beneficial for the relevant institutions of other ECO Member States.
The following presentations were made by the participants during the two days Workshop highlighting different aspects of Inflation Targeting and their country’s/organization’s experience:
1. Forecasting and Policy Analysis Systems-Design Issues and Cross-Country Experience by Mr. Turgut Kisinbay, International Monetary Fund.
2. A Practitioner’s View on Inflation Targeting Implementation by Mr. David Vavra, International Monetary Fund.
3. What do we know about Inflation Targeting in the World? By Mr. Klaus Schmidt-Hebbel, Chief of Economic Research, Central Bank of Chile.
4. Inflation Targeting: UK experience and current challenges by Mr. Gill Hammond CCBS, Bank of England.
5. Does the IMF prescription of inflation targeting for developing countries work? – Statement by Professor Abdul Wassay Haqiqi, Senior Advisor to the Minister of Economy, Islamic Republic of Afghanistan.
6. The Conduct of Monetary Policy in a Post Conflict Environment by Mr. Matiullah Faeeq, Central Bank of Afghanistan.
7. Financial Stability and Monetary Policy of the National Bank of Kazakhstan by Ms. Saida Agambayeva, National Bank of Kazakhstan.
8. Turkish Experience with Inflation Targeting: Lessons and Challenges by Mr. Hakan Kara, Central Bank of Turkey.
9. Forecasting and Policy Analysis System (FPAS) at the Central Bank of Turkey by Mr. Zelal Aktas, Central Bank of Turkey.
10. Full-fledged Inflation Targeting: Operational Framework by Ms. Mehtap Kesriyeli, Central Bank of Turkey.
11. Inflation Targeting under IMF Conditionality by Mr. Oclay Yucel Culha, Central Bank of Turkey.
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