Jul 09 2018

Erdogan takes steps on central bank hiring

Turkish President Recep Tayyip Erdogan signed off on an emergency decree removing a clause stipulating that the central bank governor must be appointed by the government for a term of five years ahead of his swearing-in ceremony on Monday.

The decision was made to bring Turkish law in conformity with Turkey’s new presidential system, Dunya newspaper reported.

The decree reduces a requirement for the governor and his deputies to have served 10 years in the banking profession to five years, the newspaper said.

Concern about the Turkish central bank’s independence from political influence has intensified in recent weeks after Erdogan said he’d take more control over monetary policy following presidential elections, held on June 24.

In May, the lira extended losses this year to more than 20 percent after Erdogan, who says higher interest rates cause inflation, said he’d reduce rates after the vote.

The central bank increased its benchmark rate by 425 basis points in May and June to stem the lira’s losses and curb inflation, which accelerated to 15.4 percent in June from 12.2 percent in May.