Turkey’s central bank has ‘instrumental independence’, finance minister says

Turkish Treasury and Finance Minister Lütfi Elvan said the central bank has the freedom to use whichever monetary policy tools it sees fit.

The central bank will work in tandem with the government to achieve the country’s economic goals, including battling inflation, Elvan told members of the International Investors Association (YASED) at a meeting on Tuesday, according to the state-run Anadolu news agency.

“Let me emphasise that our central bank has every kind of instrumental independence,” Elvan said. “Our monetary and fiscal policies will be in coordination.”

Investors in Turkey say the central bank should be given full authority to set monetary policy after the lira slumped to successive record lows against the dollar this year and inflation surged. Turkish President Recep Tayyip Erdoğan has sacked two central bank governors in two years and repeatedly called for lower interest rates to help spur economic growth.

Elvan said that the government will seek to solve every economic problem that the country faces in a transparent, accountable, rational and predictable manner within the framework of the rules of the market economy.

“We will implement policies that will bring our credibility to the highest levels among domestic and foreign investors, and no question marks will remain in anyone's mind,” he said.

The central bank hiked its benchmark interest rate to 15 percent from 10.25 percent last month. The decision came after Erdoğan sacked and replaced the bank's governor, bringing in Naci Ağbal, his chief of budgetary affairs and a former finance minister. 

The government will also take measures to increase Turkey’s competitiveness “and total factor productivity with structural policies and micro reforms”, Elvan said.