Erdoğan turns to Islamic theologian on rates decisions, columnist says

Turkish President Recep Tayyip Erdoğan is turning to an Islamic theologian sitting on his presidential economic board when deciding on monetary policy, columnist Erdal Sağlam said on Tuesday.

Professor Servet Bayındır is one of two key figures that Erdoğan turns to, Sağlam said in an article for the Cumhuriyet newspaper on Tuesday. The other is former defence minister Nurettin Canikli, he said.

“Central bank governors get in contact with the Presidency before the Monetary Policy Committee meetings and get permission for the decisions to be taken,” Sağlam said.

“It is said that the president, who listens to the central bank governors' arguments, often tells them: "Go and explain it to Servet Hodja and Nurettin." It is stated that Erdoğan makes the decision on interest rates after taking the opinions of these two people,” he said.

Turkey’s central bank has cut interest rates to 15 percent from 19 percent over the past three months even after inflation accelerated to almost 20 percent. The policy has sparked a sharp sell-off in the lira. The currency hit a record low of 12.48 per dollar on Tuesday, taking losses for the day to 10 percent. It has dropped by almost 40 percent this year.

Last week, Erdoğan, who is a devout Muslim, invoked a verse from the Koran when explaining his interest rate-cutting policy.

Bayındır’s 2005 doctoral thesis was on the role of interest-free banking in Islamic jurisprudence, Sağlam said. He also works as a member of Istanbul University’s faculty of theology, gaining the status of professor in 2014. Canikli is a founding member of Erdoğan’s governing Justice and Development Party (AKP) and holds a masters degree in finance from Sheffield University. He is a graduate of an Islamic high school.

Chief economic advisers Prof. Erişah Arican, Meltem Taylan Aydın, Cemil Ertem and Yiğit Bulut are also asked for their opinions on interest rates from time to time, Sağlam said.

“However, it is said that these advisors are more likely to comment that "interest rate cuts would be appropriate" because they already know the president's views on the matter intimately,” he said.

Prof. Erişah Arıcan, who supervised the doctoral thesis of central bank governor Şahap Kavcıoğlu, acts as a bridge between Kavcıoğlu and Erdoğan on other bank-related affairs, Sağlam said.

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