Turkey's central bank chief fired as recession hits economy

Murat Cetinkaya.
Murat Cetinkaya.

ANKARA • Turkey yesterday fired its central bank governor as policy differences between the government and the bank deepened in the face of an economic slump, volatility in the lira currency and high inflation.

Mr Murat Cetinkaya, who had been serving as the governor since April 2016, was removed from the role and was replaced by his deputy Murat Uysal, a presidential decree published on the official gazette showed.

No official reason was given for the sacking, but markets have speculated for weeks that Mr Cetinkaya may be pushed out by the government because of his reluctance to cut rates.

The central bank has faced pressure in the past from President Recep Tayyip Erdogan to lower interest rates to revive an economy which slipped into recession earlier this year.

The Turkish economy shrank sharply for the second straight quarter early this year as a punishing currency crisis, and soaring inflation and interest rates took a heavy toll on output.

"President Erdogan was unhappy about the interest rate and he expressed his discontent at every chance. The bank's decision in June to keep rates constant added to the problem with Cetinkaya," a senior government official said.

"Erdogan remains determined to improve the economy, and for that he made the decision to remove Cetinkaya," the official added, asking not to be named.


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

A SENIOR GOVERNMENT OFFICIAL, on President Recep Tayyip Erdogan's unhappiness with the head of Turkey's central bank.

According to two other government sources, differences between the government and the governor over the conduct of monetary policy have deepened in the past few months.

Mr Cetinkaya had hiked the benchmark interest rate by a total of 750 basis points last year to support the ailing lira, pushing it to 24 per cent by September where it has since remained.

Mr Erdogan, whose son-in-law is the Finance and Treasury Minister, has repeatedly criticised the central bank for keeping rates high.

"The President and the Finance Minister demanded his resignation, but Cetinkaya reminded them of the bank's independence and declined to resign," the other source said.

In a statement yesterday, 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.


A version of this article appeared in the print edition of The Sunday Times on July 07, 2019, with the headline 'Turkey's central bank chief fired as recession hits economy'. Print Edition | Subscribe