[ad_1]
Ankara – Turkish President Tayyip Erdogan has dismissed the governor of the central bank for refusing the government's repeated demands for rate cuts, the Hurriyet daily quoted Erdogan quoted him as saying in a meeting with his party's deputies .
Governor Murat Cetinkaya, whose term was to last until 2020, was replaced by his deputy Murat Uysal, a presidential decree issued Saturday in the official journal.
"We have told him repeatedly at economic meetings that he should cut rates. We told him that lowering rates would help lower inflation. He did not do what was necessary, Erdogan said.
The Hurriyet daily explained that Erdogan had explained the dismissal of Cetinkaya almost a year before the end of his term, at a consultation meeting in Istanbul with members of his party, the AKK party.
"We were not on the same page," Erdogan said.
No official reason was given to justify the dismissal, but government sources spoke of Erdogan's frustration that the bank had maintained its key rate at 24% since last September in order to support the troubled currency, read it.
In a statement on Saturday, Uysal said it would independently implement monetary policy instruments aimed at achieving and maintaining the primary objective of price stability.
Despite badurances from the new governor, critics say the movement has once again shown that Erdogan fully controls monetary policy and that Turkey will experience a period of rapid rate cuts.
"The dismissal of the CBRT governor by presidential decree shows that Erdogan is responsible for monetary policy," said Wolfango Piccoli of London-based political risk advisory firm Teneo. "The decision significantly undermines the credibility left by the CBRT. He also points out that the overall institutional deterioration continues unabated ".
Executive Presidency
Under Turkey's new executive presidency, effective in 2018, Erdogan does not need the cabinet's approval to change the governor of the central bank.
A senior Turkish economist also said that Erdogan's surprise rejection of Cetinkaya could further undermine the bank's perception of independence.
"While the debate around the independence of the central bank is continuing, the withdrawal of Cetinkaya, which apparently resisted certain measures, and its replacement by an unusual method will only fuel this debate," said the senior economist. "We will see how he can convince markets to lower rates while independence is increasingly uncertain."
The central bank has kept its key rate unchanged since its rise of 625 basis points to 24% in September, to prevent a major financial crisis.
Several economists were already expecting a rate cut at a monetary council meeting on July 25, with inflation falling to 15.7% in June, its lowest level in a year.
"The newspapers quoted Erdogan as saying that Cetinkaya had not done what he had been told regarding tariffs. It casts a shadow over Uysal, but it will be very aggressive in reducing rates, "said another Turkish economist.
Reuters
[ad_2]
Source link
