Hours after unexpectedly forcing out the central bank’s governor, Turkish President Recep Tayyip Erdogan made clear that he expects both the successor and the rest of the establishment to toe the government’s line on monetary policy.
The decision to dismiss Murat Cetinkaya, whose four-year term was due to end in 2020, was announced in the early hours on Saturday following a pause in interest rates that lasted for over nine months. Deputy Governor Murat Uysal was named as a replacement. Investors weren’t impressed -- the lira slid more than 3% in early Asian trading before paring losses.
During a closed meeting after the decree came out, Erdogan told lawmakers from his ruling party that politicians and bureaucrats all need to get behind his conviction that higher interest rates cause inflation, according to an official who was present. He also threatened consequences for anyone who defies the government’s economic policies, the official said.
Erdogan’s office of communication didn’t respond to calls and text messages seeking comment. “By abruptly dismissing Cetinkaya, Erdogan reminded everyone who is in charge of monetary policy,” said Piotr Matys, a London-based strategist at Rabobank.
Governance is everything and when you have an autocrat in power who is resorting to progressively more desperate measures to hold onto power there is a problem. Losing the re-run election for mayor of Istanbul, a couple of weeks ago, was a wake-up call for Erdogan. That’s a position he once held himself and retaining control of the largest city is essential if he wants to hold onto power. That is probably what precipitated the ouster of the central bank chief.Click HERE to subscribe to Fuller Treacy Money Back to top