Published: Tue, July 09, 2019
Markets | By Otis Pena

News Erdogan fires the Governor of the Bank of Turkey By NEOnline

News Erdogan fires the Governor of the Bank of Turkey By NEOnline

"We told him repeatedly in economy meetings that he should cut rates. He didn't do what was necessary", Erdogan was quoted as saying.

But after meeting his USA counterpart, Donald Trump, on the sidelines of the G20 summit in Japan earlier this month, Erdogan said he had been assured there would be no sanctions.

"The dismissal of Turkey's central bank governor over the weekend increases the chances of aggressive cuts in interest rates in the near-term", wrote Jason Tuvey, senior emerging markets economist at Capital Economics. President Donald Trump carried on over the weekend to attempt to oppress his nominated central bank chief into cutting interest rates.

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The new governor Murat Usyal said on Saturday that he would independently take decisions to maintain price stability.

"The sacking of the governor of the CBRT by presidential decree shows that Erdogan is in charge of monetary policy", said Wolfango Piccoli, of the London-based political risk consultancy Teneo. "It also signals that overall institutional degradation continues unabated", he added. There was no official explanation provided for the dismissal of Murat Cetinkaya but Erdogan was defeated by Turkey's escalated interest rate which he condemned as the reason for country's escalated inflation. More broadly, investors were concerned that the central bank will lose independence and thus the ability to react to challenges in a timely and appropriate manner.

Babacan was rumored to have been planning to form a splinter party along with former President Abdullah Gul and others said to be disgruntled with Erdogan's increasingly authoritarian rule.

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