Erdogan Ousts Central Bank Chief Who Drew Ire for Holding Rates

Erdogan Ousts Central Bank Chief Who Drew Ire for Holding Rates

Erdogan Ousts Central Bank Chief Who Drew Ire for Holding Rates

'The goal of removing the central bank governor is clear: print money and lower the interest (rate) but the governor can not be sacked except for the reasons specified in its law.

According to Reuters news reports, Turkish central bank governor Murat Cetinkaya, serving since April 2016 as the governor, was ousted from his role and been replaced by deputy governor Murat Uysal, as per a presidential order published on the official gazette. Turkey's inflation rate has also fallen recently, which may allow the central bank to consider cutting interest rates.

Previously a deputy governor, Uysal replaces Murat Cetinkaya as the bank's governor, a presidential decree says.


The Turkish economy shrank sharply for the second straight quarter in early 2019, amid soaring inflation and unemployment.

"Erdogan remains determined to improve the economy, and for that he made the decision to remove Cetinkaya", the official added, asking not to be named.

"The difference of opinions between the governor and the ministers in charge of the economy has deepened in the recent period", said one of the sources. Mr Erdogan's public stance on interest rates - and perceived political interference with the central bank - was credited by many with the fall in the lira's value.

In a statement on Saturday, the central bank said it will continue to operate independently and that the new governor will make maintaining price stability the key goal.

"President Erdogan was unhappy about the interest rate and he expressed his discontent at every chance", a senior government official told the Reuters news agency. A press conference was planned "in the coming days".

The central bank has kept its benchmark rate unchanged since it increased the rate by 625 basis points to 24% in September to prevent a full-blown financial crisis.

However, the Erdogan-led government was not available to immediately deliver a response.

The announcement has prompted renewed concern over the Central Bank's independence.

In 2018, the Turkish economy struggled due to a depreciation of the national currency, the lira, which fell almost 40 percent against the USA dollar as relations between Ankara and Washington deteriorated.

"The removal of the governor from duty creates doubt regarding the job security of the head banker and the bank's independence".

In particular, measures including raising taxes on high-income individuals, lowering corporate taxes, and transferring the central bank's 46 billion lira ($8 billion) in legal reserves to the budget.

Latest News