Turkish President Erdogan criticises Central Bank, lira weakens against dollar

By bne IntelliNews February 4, 2015

President Recep Tayyip Erdogan renewed his criticism of the Central Bank’s policies on February 4 only a day after fresh inflation data prompted the Central Bank to delay its decision to reduce interest rates.

Inflation will fall when interest rates are cut, Erdogan repeated his previous views. It (the Central Bank) is called an independent body but this is where Turkey ends up when that is the case, Erdogan said.

Erdogan’s remarks as well as comments from economy minister Nihat Zeybekci, another vocal critic of the Central Bank, raise questions over the Bank’s independence.

TRY weakened to 2.4360 against the dollar on February 4 as Erdogan spoke from 2.4210 before Erdogan’s comments.

The Central Bank said on February 3 that the Monetary Policy Committee) would assess the inflation outlook in detail at the regular meeting which will be held on February 24, after new data showed inflation fell less than one percentage point in January. Central Bank governor Erdem Basci had earlier said the Bank could review rates at an emergency meeting for a possible cut if the decline in annual inflation exceeded one percentage point. According to the statistics office TUIK, consumer price inflation came in at 1.1% m/m in January, more than the market expectation of 0.7% m/m. Annual inflation eased to 7.24% from 8.17% in December.

Policy Rate (%)
Date one-week repo
May-2010 7.00
Dec-2010 6.50
Jan-2011 6.25
Aug-2011 5.75
Dec-2012 5.50
Apr-2013 5.00
May-2013 4.50
Jan-2014 10.00
May-2014 9.50
Jun-14 8.75
Jul-14 8.25
Jan-15 7.75
Source: Central Bank

Related Articles

High net worth Turks and capital flee Turkey as prospect of Erdogan Mark II nears

Turks are joining foreign investors in shifting their assets—and in many cases themselves—out of the country amid fears for their money and security should President Recep Tayyip Erdogan win more ... more

Simsek: Better policy mix and reforms will help secure soft landing for Turkey

Turkey's strengthening fiscal and monetary policy mix and reforms should help secure a soft landing for its economy, Deputy Prime Minister Mehmet Simsek said on June 12. Ex-Wall Street banker ... more

One to two-notch downgrade implied for Turkey by spread on eurobond says RBI

A one to two-notch downgrade is implied for Turkey by the spread on its sovereign USD eurobond due 2028, Raiffeisen Bank International (RBI) said on June 12. In a note to investors, RBI analyst ... more

Dismiss