Turkey Central Bank Will ‘Do the Right Thing,’ Governor Says
Turkey’s central bank will do “the right thing” when it meets on interest rates on October 21, Governor Sahap Kavcioglu said, speaking after a rare meeting with the country’s main opposition leader on Friday.
“We will work with the technical team until October 21 and make a decision by analyzing the data and developments,” Kavcioglu told reporters in Ankara. No one should doubt that the bank will “make the right decision,” the governor said. A roughly $35 billion increase in the central bank’s foreign exchange reserves over the past seven months shows the institution’s strength, Kavcioglu said.
Three central bank officials who were dismissed earlier this week by President Recep Tayyip Erdogan “were there when the rate was cut and there when it was raised,” Kavcioglu said. It wouldn’t be right to “seek for something” behind the firings, the governor added.
The bank’s Monetary Policy Committee, or MPC, will announce its next decision on interest rates on October 21. The Committee is expected to cut the one-week repo rate by 100 basis points to 17%, according to the median estimate in a Bloomberg survey of 15 analysts.
The lira weakened 6% since Sept. 23, when the MPC unexpectedly reduced the benchmark rate by 100 basis points. The currency slid to a fresh low of 9.2422 per dollar on Friday, taking this year’s decline to more than 19%.
Speaking separately after the meeting, Kemal Kilicdaroglu, leader of the Republican People’s Party, urged President Erdogan to “respect the central bank’s institutional identity.” Erdogan, a defender of the theory that high rates cause inflation, should leave interest rate decisions to “qualified people,” Kilicdaroglu said.
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