Middle East

Erdogan sacks Turkey central bank governor amid rate tensions

President Recep Tayyip Erdogan has sacked the governor of Turkey’s central bank and replaced him with his deputy, a presidential decree said Saturday, after months of tension with the government over high interest rates.

Murat Cetinkaya, who was appointed to the role in April 2016, has been replaced by Murat Uysal, according to the decree published in the official gazette, which gave no official reason for the change.

There had been recent speculation that Cetinkaya could be replaced amid disagreements with the government on cutting interest rates.

Erdogan has repeatedly railed against high interest rates and called for them to be lowered to stimulate growth.

He once called high rates the “mother and father of all evil”.

Turkey’s main interest rate is 24 percent after the bank under Cetinkaya made an aggressive rate hike of 625 basis points last September following a currency crisis in August.

Last month, Erdogan said the current rate was “unacceptable”, promising to find a solution as soon as possible.

“I agree on the independence of the central bank but let me put it very clearly that I am against interest (rate) policies and above all, high interest rates,” he said.


‘Adventurist path’

Erdogan’s ruling Justice and Development Party (AKP) has built its success on Turkey’s strong growth, with supporters boasting of progress in living standards during the Turkish leader’s 16 years in office – first as prime minister and then president.

But the weakening economy contributed to the AKP losing Ankara and Istanbul in recent local elections, in what was a stinging rebuke to the ruling party in power since 2002.

Economic columnist Ugur Gurses said that the central bank chief was sacked with the goal of lowering rates.

“As I predicted, Ankara is swiftly taking an adventurist path after losing the election,” he wrote on Twitter.

“The goal of removing the central bank governor is clear: print money and lower the interest (rate) but the governor cannot be sacked except for the reasons specified in its law. A presidential decree is not above law.”

The central bank’s next policy meeting is scheduled to be held on July 25.

The new governor Uysal said he would continue to use monetary policy tools “independently” while remaining focused on ensuring price stability as his “main aim”, according to a central bank statement.

Uysal, who had served as deputy governor since June 2016, will hold a press conference in the coming days, the bank said.

The change of central bank chief came after markets closed on Friday.


Disputes with US

Turkish inflation fell to 15.72 percent in June — the lowest rate in nearly a year — from 18.71 percent in May, official statistics showed on Wednesday.

The opposition Republican People’s Party (CHP) spoke out against the removal of Cetinkaya, with spokesman Faik Oztrak accusing the president of interfering in the independence of the central bank.

“Those who do this have lost the right to say ‘trust in our economy’. The Turkish central bank is a hostage in the hands of the Palace. Full stop,” he wrote on Twitter.

Turkey’s economic outlook is likely to be overshadowed by Erdogan’s testy relations with the United States, which were already frayed by numerous disputes including Ankara’s purchasing of Russian missiles.

Turkey expects the delivery of the Russian S-400s this month despite Washington suspending Ankara’s participation in the US-made F-35 fighter jet programme and warning of more sanctions to come.

After a trade dispute with the US last year, Washington imposed sanctions on Turkey and tariffs on some Turkish goods, leading to a 30 percent slide in the lira’s value.

Image: AFP/File / Charly TRIBALLEAU Turkish President Recep Tayyip Erdogan has repeatedly railed against the country’s high interest rates

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