Turkish President Recep Tayyip Erdogan/Oliver Bunic
On 6 July, the Turkish president unexpectedly dismissed Murat Cetinkaya and made it clear that he expects his replacement as central bank governor to follow the government’s line on monetary policy.
Monday 15, July 2019
Turkish President Recep Tayyip Erdogan promised to significantly lower interest rates by the end of the year, a week after ousting the country’s central bank chief, reported Bloomberg.
“We aim to reduce inflation to one digit by the end of this year, as we achieve this, we will achieve our year-end interest rate target as well,” says Erdogan.
In an echo of US President Donald Trump’s pressure on the Federal Reserve, Erdogan has frequently accused the central bank of keeping borrowing costs too high. Last month, he complained that while the Fed was moving toward a rate cut, Turkey’s policy rate of 24 per cent is unacceptable.
Cetinkaya had held rates steady for more than nine months.
Turkish stocks and the lira declined on news of Centinkaya’s ouster, Erdogan is also at risk of US sanctions after Turkey began receiving parts of a Russian-made missile defence system.
When Trump and Erdogan met at the Group of 20 summit in Japan in June, the US president suggested possible leniency on sanction and sought to blame the Obama administration for Turkey’s decision to buy the Russian equipment, saying the impasse is not really Erdogan’s fault.