Turkey's Erdogan revealed the reason of dismissal of Central Bank's chief | Eurasia Diary - ednews.net

18 October, Friday

Turkey's Erdogan revealed the reason of dismissal of Central Bank's chief

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Turkish President Tayyip Erdogan said on Wednesday he had dismissed the central bank governor because he failed to follow instructions on interest rates and the bank had not properly fulfilled its role, Reuters reported.

Erdogan sacked Murat Cetinkaya on Saturday, a year before the governor’s four-year term was due to end, replacing him with his deputy Murat Uysal and reigniting concerns about political interference in monetary policy.

“We believed that the person who was not conforming to instructions given on this subject of monetary policy, this mother of all evil called interest rates, needed to be changed,” Erdogan said in a speech in Ankara.

Cetinkaya hiked interest rates by 625 basis points in September to stem a currency crisis and kept them at 24% this year, preventing further losses in Turkey’s lira but helping push the economy into recession.

Read more: Economic crisis made Erdogan to fire Central Bank chief

“You will soon see how our interest rate policy will be formed, because interest rates are the mother of inflation,” Erdogan said, adding that the central bank would provide more support to the government’s economic programme.

Erdogan, a frequent critic of high interest rates, has often called for lower rates to boost the economy, which shrank 2.6% in the first quarter, after a slide of 30% in the lira last year against a background of soaring inflation.

The lira, which weakened after Saturday’s move, was little changed at 5.71 against the dollar after Erdogan’s latest comments.

A Reuters poll found that economists now expect the Central Bank to cut rates at its next monetary policy meeting on July 25 by 200 basis points, a deeper cut than they had forecast before Erdogan’s surprise sacking of Cetinkaya.

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