By Dow Jones Business News,
January 23, 2014, 12:07:00 PM EDT
By Ian Talley
WASHINGTON--Hours after Turkey's central bank intervened in exchange-rate markets to halt the damaging fall in the
value of the lira, the International Monetary Fund Thursday said authorities should stick to a flexible exchange rate
and focus more on taming inflation.
"Turkey has had a flexible exchange rate system for a long time, and we believe it has served Turkey well," said IMF
spokesman William Murray.
The IMF has been critical of the central bank's monetary policy in the recent past, warning that an increase in
interest rates was an immediate priority to tame near-rampant inflation, and that the bank's monetary-policy framework
is overly complex, has too many objectives, and is undermining its very mandate.
"What matters is that monetary policy avoids second-round effects to inflation by ensuring a strong nominal anchor,"
Mr. Murray said.
Economists, including those at the World Bank and the IMF, have warned that weaknesses in Turkey's economy and
political turmoil in Ankara puts the country at particular risk for capital outflows and currency depreciation.
Turkey's central bank said it was intervening with direct foreign-exchange sales because of "unhealthy price
Write to Ian Talley at firstname.lastname@example.org
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