Lira sinks to a record low: Erdogan dismisses central bank staff

The Turkish president apparently has little confidence in the monetary policy stance of the central bank. Despite a cut in the key interest rate last month – probably driven by Erdogan – three central bankers now have to go at his behest.

The Turkish President Recep Tayyip Erdogan has again interfered in the personnel policy of the Turkish central bank. He dismissed three members of the monetary policy committee on Wednesday and appointed two new members in their place, reports the Turkish official gazette. Taha Cakmak became deputy central bank chief and Yusuf Tuna became a member of the monetary policy committee. The rate of the local currency fell after the announcement to a record low of 9.17 lira for one dollar.

Last month the central bank cut the key rate from 19 percent to 18 percent, despite inflation of around 20 percent. Observers see behind this the influence of Erdogan, who is a declared opponent of high interest rates. The presidential office said on Wednesday that Erdogan had met with central bank chief Sahap Kavcioglu and published a joint photo.

A week ago, the Reuters news agency learned from people familiar with the matter that the president had lost confidence in the central bank chief. The reason is that Kavcioglu did not lower the key rate. In the past three years, the lira has lost more than half of its value. According to observers, this is also due to Erdogan’s constant interference in central bank matters, which undermines confidence in the monetary authorities and in the lira.