Erdoğan sacks central bank’s deputy chief in management overhaul

Turkish President Recep Tayyip Erdoğan sacked Oğuzhan Özbaş, a deputy governor of the central bank, meaning four of the bank’s seven-member rate-setting committee have lost their jobs since March.

Erdoğan replaced Özbaş, who has a PhD in financial economics from the Massachusetts Institute of Technology (MIT), with Semih Tümen, a former central bank official and economics professor who has served as an adviser to Erdoğan’s office. Özbaş was appointed in August 2019.

The president published the decision, taken by decree, in the government’s Official Gazette on Tuesday.

Erdoğan is overhauling management of the central bank since dismissing ex-finance minister Naci Ağbal as governor in mid-March. Ağbal had hiked interest rates to 19 percent from 11.25 percent during his four-month tenure to rein in inflation and defend the lira, winning praise from foreign investors and helping the currency to rally.

The lira has lost 17 percent of its value since Ağbal’s departure, as the central bank kept interest rates on hold even as inflation accelerated to 17.1 percent. Erdoğan maintains that higher interest rates are inflationary, a view that runs counter to traditional economic thinking. Şahap Kavcıoğlu, Ağbal’s successor, has sympathised with that view.

“Can the last one leaving please turn out the lights?” Tim Ash, senior emerging markets strategist at BlueBay Asset Management in London, said in comments on Twitter.

The lira dropped by 0.3 percent to 8.4 per dollar on Tuesday, trading close to a record low of 8.58 per dollar reached in early November, just prior to Ağbal’s arrival. The lira had traded at about 4 per dollar three years ago, just prior to a currency crisis that was partly provoked by excessive government stimulus.

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