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On Sunday, the new governor of the Turkish Central Bank, Shehab Kafcioglu, pledged to take the necessary measures to fight inflation, with the aim of reassuring the struggling markets in the face of the sudden dismissal of his predecessor.
“The Turkish Central Bank will continue to effectively use all its monetary policy tools in order to achieve its goal: a sustainable reduction in inflation,” Kavcıolu said in a statement.
This is his first public statement since assuming the presidency of the Central Bank on Saturday.
His predecessor, Naji Aghbal, a former finance minister, was unceremoniously removed from his post by presidential decree issued Friday evening and Saturday, around 5 months after his appointment.
His sacking comes two days after the central bank raised the key rate two hundred points to 19% to counter inflation, a measure welcomed by the markets.
Yet President Recep Tayyip Erdogan opposes high interest rates, which he regularly describes as “the mother and father of all evil”.
Former Governor of the Turkish Central Bank, Naji Aghbal
From this point of view, it appears that the new leader, Kavcioglu, is more compatible with Erdogan’s positions.
Kavcioglu, an economist and former ruling party lawmaker, wrote an opinion piece in February in a pro-government newspaper in which he strongly criticized Aghbal’s tendency to raise interest rates because, he said. said, this would lead to an increase in inflation.
Most economists believe this slows down inflation by increasing the cost of starting a business. Raising interest rates is a tool used by a large number of central banks to combat price increases.
Rising inflation in Turkey in recent years, coupled with the devaluation of the Turkish lira, has lowered Erdogan’s popularity.
In February, inflation was 15.6% year on year.
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