ANKARA, July 7, 2019 (BSS/AFP) – 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Murat Cetinkaya, who was appointed to the role in April 2016, has been
replaced by Murat Uysal, according to the decree published in the official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.