Turkey sacks central bank chief amid economic crisis

Turkey sacks central bank chief amid economic crisis

No official reason was given for the sacking, but government sources cited Erdogan's frustration that the bank has kept its benchmark interest rate at 24% since last September to support the ailing lira currency.

A critic of high rates, Mr Erdogan has repeatedly blamed the central bank for high levels of inflation, which soared. The decision comes days after Turkey's real rate soared to a world topping 8.3% as inflation slowed more than expected, giving policy makers room to start an easing cycle.

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. Still, industrial production fell for the first time this year in April, which raises the risk of a double-dip recession. The Turkish central bank is a hostage in the hands of the Palace.

Erdogan remains determined to improve the economy, and for that he made the decision to remove Cetinkaya.

He also said that communication channels will be used in line with the central bank's targets. "This is unacceptable and is hurting Turkey", he complained in June.

Erdogan is using the powers granted to his office after last year's general election, which transformed the political system into an executive presidency.

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

Erdogan believes lowering interest rates will increase economic growth, but the central bank past year instead raised its benchmark interest rate from 17.5 percent to 24 percent, arguing that the hike was necessary to fight inflation and boost the lira.

"Removing the central bank's governor in this manner will deal a big blow to its institutional structure, capacity and independence", Ibrahim Turhan, a former deputy central bank governor, wrote on Twitter. Uysal will hold a press conference in the coming days, according to a statement on the central bank's website.

The country's currency lost 30 percent of its value last year, dropping to record lows, and has lost another 10 percent this year, while inflation hit a record high of more than 25 percent in October.

Related Articles