- Three MPC members sacked, two new appointed
- The pound hits a new high of 9.19 against the dollar
- Erdogan sacked three governors in 2-1 / 2 years
ISTANBUL, October 14 (Hfrance.fr) - Turkish President Tayyip Erdogan sacked three Members of the Monetary Policy Committee (MPC ) of the central bank on Thursday appointed two new members in their place, the country's official gazette said, sending the read to record levels.
It said those fired were Vice Governors Semih Tumen and Ugur Namik Kucuk, as well as another MPC member Abdullah Yavas.
Erdogan appointed Taha Cakmak as a deputy central bank governor and Yusuf Tuna as a member of the MPC, he said.
Analysts viewed this decision as further evidence of Erdogan's political interference,a self-proclaimed enemy of interest rates who frequently calls for rate cuts.
The lire weakened to a record low of 9.1900 against the dollar after the announcement, a loss of 1% on the day. It has weakened by around 19% so far this year, due to monetary policy concerns.
It then cut some of the day's losses to hold at 9:1325 5:33 am GMT.
Last month, the central bank unexpectedly cut its key rate (TRINT = ECI) at 18% against 19% despite annual inflation of nearly 20%, triggering another massive sell off in the lira, which was also affected by the strengthening of the dollar against other currencies.
The overhaul of the MPC has intervenedenue after the presidency announced Wednesday evening that Erdogan had met with Central Bank Governor Sahap Kavcioglu, posting a photo of Erdogan standing next to him.
A source told Hfrance.fr that Yavas and Kucuk recently opposed certain decisions taken by the MPC, while Kucuk had also opposed sales of reserves to support the lire in previous years.
"Kucuk had a sentence at the MPC which the bank is still remembered: "The stability of the lira, its reputation and the price stability that accompanies it are prerequisites for economic growth and development based on productivity. The growth provided by d ' other means will not be permanent, ' "said the source.
" ' If you keep the interest rate lower than that where he belongst be today, the level at which you need to raise the interest rate until tomorrow will be higher than the level it needs to be today, "said the person quoting Kucuk.
"I think this is a loss for the (central bank), " the source said of the dismissal of members.
Kavcioglu said this week that the rate cut was no surprise and had little to do with the subsequent sale of the lire. learn more
The bank's next policy meeting is October 21.
The Last week, three sources familiar with the matter said Erdogan was losing confidence in Kavcioglu, less than seven months after sacking Kavcioglu's predecessor, and that the two had lost faith in Kavcioglu.u release in recent weeks. learn more
Erdogan has made a series of changes to the MPC in recent years. He has fired three bank governors over the past 2-1 / 2 years over the disruption policy, hitting the lira and seriously damaging the credibility and predictability of monetary policy. learn more
"Sacking central bank officials in the middle of the night without a very good explanation is not the way to strengthen central bank credibility or to strengthen market confidence, "a foreign investor said Thursday.
Global inflation hit a 2.5-year high at 19.58% in SeptemberSeptember, while a baseline measure - which Kavcioglu insisted on over the past month - was 16.98%.
Erdogan named Kavcioglu in March after ousting Naci Agbal, a political hawk who hiked rates to 19%. Erdogan stepped up the pressure for easing in June when he said publicly that he spoke to Kavcioglu about the need for a rate cut after August. Daren Butler report, additional report by Ezgi Erkoyun, Nevzat Devranoglu, Jonathan Spicer and Ali Kucukgocmen; Edited by Dominic Evans and Stephen Coates
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