Turkish Central Bank Governor Sacked for Resisting 300 Point Rate Cut
ANKARA (Reuters) – President Tayyip Erdogan’s abrupt decision to sack Turkey’s central bank governor Murat Cetinkaya came after months in which they had not met and was precipitated when Cetinkaya rebuffed requests in June for a 300 point rate cut, three sources said.
Erdogan has made no secret of his hostility to high interest rates which, contrary to orthodox economic thinking, he says drives up inflation. He has said Cetinkaya was ousted because the former governor had not followed instructions.
Accounts from three sources with knowledge of the matter - speaking just days before the central bank’s next rate decision - offer fresh details of a fraught relationship which finally ended when Cetinkaya’s sacking was announced shortly before dawn on a Saturday morning two weeks ago.
The governor had overseen interest rate hikes of 11.25 percentage points last year as Turkey battled a currency crisis and rising inflation. These included an eye-watering 625 basis point rise in the benchmark rate to 24% in September.
Erdogan has made no secret of his hostility to high interest rates which, contrary to orthodox economic thinking, he says drives up inflation. He has said Cetinkaya was ousted because the former governor had not followed instructions.
Accounts from three sources with knowledge of the matter - speaking just days before the central bank’s next rate decision - offer fresh details of a fraught relationship which finally ended when Cetinkaya’s sacking was announced shortly before dawn on a Saturday morning two weeks ago.
The governor had overseen interest rate hikes of 11.25 percentage points last year as Turkey battled a currency crisis and rising inflation. These included an eye-watering 625 basis point rise in the benchmark rate to 24% in September.