Turkey Central Bank Said to Pledge Policy Continuity

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Turkey’s new central bank governor promised to stick to the single interest-rate framework adopted by his predecessor, state news agency Anadolu reported, citing a meeting between the monetary authority and commercial lenders on Wednesday.

The monetary authority’s new management led by Governor Sahap Kavcioglu pledged continuity in policy and to maintain the current operational framework, Anadolu said, citing banking executives without identifying them.

The central bank declined to comment on what was discussed at the meeting.

In Kavcioglu’s second high-profile meeting since his abrupt appointment to the job on Saturday, the monetary authority said it will take into account inflation outlook, real interest rates offered by peer countries and global capital flows, Anadolu said.

Turkey Central Bank Said to Pledge Policy Continuity

Turkish stocks and bonds tumbled along with the lira after President Recep Tayyip Erdogan’s weekend ouster of market-friendly central bank chief Naci Agbal. The sacking of three governors in less than two years fueled concerns about a lurch back to unorthodox policies. Agbal’s term was a veritable honeymoon for traders as he delivered a series of interest-rate hikes and ended a complex funding structure criticized by investors for its lack of transparency.

Kavcioglu, a columnist and university professor, has been a critic of the recent interest-rate increases enacted under Agbal’s stewardship, including last week’s larger-than-expected hike.

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