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Erdogan dismisses the next central bank chief

Turkish President Recep Erdogan has dismissed the head of the Turkish central bank, Naci Agbal, after only a few months in office. Previously, he had raised the key rate drastically.

For the second time within a few months, Turkish President Recep Tayyip Erdogan dismissed the head of the central bank. A corresponding decision by Erdogan was surprisingly published in the official gazette on Saturday night. No reason was given. The new head of the central bank and successor to the slain Naci Agbal will be Sahap Kavcioglu, a former MP of Erdogan’s ruling party, the AKP.

Just a few days ago, the Turkish central bank unexpectedly raised the key interest rate – against the will of the president – by two points to 19 percent. Agbal had tried to get the high inflation under control with the interest rate hikes and announced a continuation of the restrictive monetary policy. The annual inflation rate rose to more than 15 percent in February.

Food prices rose sharply in February

Food in particular is becoming more and more expensive: food prices rose by 18.4 percent on an annual basis in February. There were drastic price increases for staple foods such as eggs, bread, sunflower oil and cheese. Erdogan is therefore also under domestic political pressure, and there is growing displeasure among the people.

The president repeatedly urges low interest rates and often describes the key rate as the “mother of all evil”. As a result, doubts about the independence of the Turkish central bank had arisen in the past. Agbal’s predecessor Murat Uysal could only hold office for a little over a year and was replaced at the beginning of November. Shortly thereafter, Erdogan’s son-in-law Berat Albayrak unexpectedly resigned as finance minister.

Erdogan announced economic reforms last week. He promised, for example, tax exemptions and cheap loans for small businesses that are particularly hard hit by the corona pandemic.

In Turkey, which has around 84 million inhabitants, some restrictions imposed due to the pandemic were lifted at the beginning of March. Depending on the region, restaurants and cafes were allowed to reopen to a limited extent. However, there are still curfews in the evening and on Sundays. The daily number of infections is currently rising sharply again. The Ministry of Health reported around 21,000 new cases on Saturday.

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