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Monetary Policy Stance
Following the approach used by the Federal Reserve Bank of Cleveland, we assess the monetary-policy stance by comparing the policy rate with the estimated nominal neutral rate. The index is:
A positive value indicates restrictive policy, a negative value indicates accommodative policy, and zero represents a neutral stance, where the policy rate equals expected inflation plus R-star. We report separate median indices using professional forecasters’ and firms’ inflation expectations. The shaded ranges reflect uncertainty arising from the different R-star estimates.
R-star Estimates
R-star is the real interest rate consistent with the economy operating at its potential without generating inflationary or disinflationary pressure. Because it is unobservable, we estimate it using several approaches, including Türkiye-specific adaptations of the Laubach–Williams and Holston–Laubach–Williams models published by the Federal Reserve Bank of New York, alongside Fisher-equation and survey-based methods. The blue line reports the median across 11 retained estimates, while the grey area shows their minimum–maximum range. HLW (2017) and HLW (2023) estimates are also displayed separately. The range represents disagreement across models, not a statistical confidence interval.
Output Gap Estimates
The output gap measures the percentage difference between actual output and its estimated potential level. Positive values indicate that activity is above potential and the economy may be operating under demand pressure; negative values indicate economic slack. We combine 18 estimates produced using statistical filters, deterministic trends, time-series decompositions, structural models, Bayesian methods, and capacity-utilization information. The blue line is the median estimate, the blue shaded area is the interquartile range, and the grey area is the full minimum–maximum range. These bands summarize variation across methods rather than statistical confidence intervals.
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