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 | |
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