March 5, 2021

Erdogan dismisses the head of the Central Bank who opposed his policies

Murat Çetinkaya, the Turkish president, Recep Tayyip Erdogan, has dismissed Murat Çetinkaya as head of the Central Bank on Saturday, who rejected pressure from the president to lower interest rates.

Çetinkaya, whose mandate expired next year, has been replaced by the deputy governor, Murat Uysal, reported the Official State Gazette.

"I will continue to apply independent monetary policy instruments, focused on price stability," Uysal said in a statement, which promises to continue with the monetary targets set by the institution at the beginning of the year.

The dismissal of Çetinkaya comes 20 days before a possible cut in interest rates – currently at 24% – after year-on-year inflation fell this week to 15%, the lowest figure in a year.

The volatility of the Turkish lira, which lost about 30% of its value against the euro in 2018, and the increase in inflation, which reached 25% last October, caused several disagreements between the governor of the Central Bank and the president Erdogan

Erdogan has been claiming for years that "high interest rates cause high inflation", an idea opposed to financial consensus, and has come to describe as "traitors" the leaders of the Central Bank to raise rates.

Many analysts have denounced that the inaction of the Government and the attempts of Erdogan to interfere in the work of the Central Bank scare the investors and stop the arrival of foreign currency, essential for Turkey.

"The interest rate in my country is 24%, this is unacceptable," said Erdogan again a few days ago.

The dismissal of Çetinkaya has provoked criticism from former members of the Central Bank, who believe that it is not a good idea to dismiss the governor before the end of his term in office in 2020.

"Removing the governor of the Central Bank in this way will be a major blow to its institutional structure, capacity and independence," Ibrahim Turhan, a former deputy governor of the institution, said in his Twitter account.

In July 2018 Erdogan approved a presidential decree to appoint or dismiss members of the Central Bank, one of the prerogatives granted by the new presidential system, which grants executive powers to the president of the country.

(tagsToTranslate) Erdogan (t) dismisses (t) Bank (t) Central (t) policies

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