Will Turkey’s Central Bank governor survive purge?
Fears grow over a looming purge at Turkey’s Central Bank, but the bank’s governor is expected to retain his post.
Rumors have been rife recently over the possible dismissal of Turkish Central Bank Governor Erdem Basci, who has resisted Prime Minister Recep Tayyip Erdogan’s calls for an interest rate cut and stuck to a cautious approach based on market conditions.
Despite the rumors, which could be well seen as a veiled threat, the Central Bank’s Monetary Policy Committee (PPK) kept the interest rates unchanged at its latest meeting on April 24. The one-week repo rate — the so-called “policy rate” — remained at 10%, the level to which the PPK had hiked it from 4.5% at its landmark meeting on Jan. 28.
The Central Bank statement read: “Inflation expectations and pricing behavior will be closely monitored and the tight monetary policy stance will be maintained until there is a significant improvement in the inflation outlook.” In other words, the Central Bank dismissed the political pressure and said it would continue to decide interest rates according to market conditions and inflation data.
This was probably the Central Bank’s hardest decision this year. In the coming months, market indicators are expected to improve, opening the door to an interest rate cut and easing political pressure on the bank.
