The Official Gazette said that Turkish President Recep Tayyip Erdogan dismissed three members of the Monetary Policy Committee of the Central Bank and appointed two new members in their place, which plunged the lira to new record levels.
The newspaper added that the dismissed were Deputy Governor of the Central Bank Semih Toman and Ugur Namek, as well as a member of the Monetary Policy Committee Abdullah Yavas, and Erdogan appointed Taha Cakmak as Deputy Governor of the Central Bank and Yusuf Tuna as a member of the Monetary Policy Committee.
After the announcement, the Turkish lira fell to a new record low of 9.1900 lira against the dollar, bringing its losses since the beginning of the year to 19% due to concerns about monetary policy.
And the Turkish presidency announced yesterday evening, Wednesday, that Erdogan had met Central Bank Governor Shihab Kavcioglu, and published their photo standing side by side.
Last month, the central bank cut the main interest rate to 18% from 19%, despite the annual inflation rising to about 20%, in a move that analysts saw as new evidence of political interference from Erdogan, who describes himself as an enemy of interest rates.
Kavcioglu said this week that “the rate cut was not a surprise and has nothing to do with selling the lira later.”
Three well-informed sources said last week that Erdogan is losing confidence in Kavcioglu less than 7 months after his predecessor was ousted, and that there has been little contact between the two in the past few weeks.
The headline inflation rate reached its highest level in two and a half years to 19.58% last September, and Erdogan appointed Kavcioglu last March after the overthrow of Naji Iqbal, raising interest rates to 19%.