Erdoğan says central bank chief was fired for refusing rate cuts - Hürriyet

Turkish President Recep Tayyip Erdoğan on Saturday said he had sacked the governor of the central bank for declining to obey the government’s repeated instructions for rate cuts, Hürriyet newspaper reported.

Without any official explanation, Erdoğan removed Murat Çetinkaya from his post as the governor of the Central Bank of Turkey in a presidential decree published on the official gazette on Saturday and replaced him with the bank’s deputy governor, Murat Uysal.

According to Hürriyet, during a consultation meeting in Istanbul with the members of the ruling Justice and Development Party (AKP), Erdoğan explained his reasons for firing Çetinkaya almost a year earlier before the end of his term.

"We told him numerous times that he had to lower interest rates during meetings on economy. ‘If interest rate falls, inflation falls,' we said to him. He did not do what was required," Hürriyet quoted Erdoğan as saying. "We weren't on the same track," the president added.

In a written statement on Saturday, Uysal said he would independently implement monetary policy instruments focused on achieving and maintaining the primary objective of price stability.

But despite the new governor’s assurance, according to the critics the move means that Erdoğan will take full control of the monetary policy from now on and Turkey will witness a period of rapid rate cuts.

The central bank has been keeping its benchmark rate unchanged since it increased the rate by 625 basis points to 24 percent in September to prevent a full-blown financial crisis. Economists were already expecting a rate reduction by the central bank at a July 25 monetary board meeting as inflation fell to 15.7 percent in June, its lowest level in one year.

The Turkish president also talked with party members a possible cabinet reshuffle. The Minister of Treasury and Finance and Erdoğan’s son-in-law, Berat Albayrak, has been at the centre of criticisms over the government’s performance in implementing an effective recovery program for Turkey’s ailing economy.

“The central bank governor is not the one politically responsible of economic policy,” said Uğur Gürses,  formerly the top columnist on economic affairs for Hürriyet newspaper, on Twitter on Saturday. According to the economist, Erdoğan should have sacked Albayrak instead of Çetinkaya.

“I will make changes in the cabinet when needed, you cannot make changes according to the wishes of others,” Hürriyet quoted Erdoğan as saying. The president told party members not be expectant about cabinet reshuffle and not to repeat the demands of the opposition, according to Hürriyet.