Ten days after the Dismissal of the head of the central bank Turkish President Recep Tayyip Erdogan also put his deputy in front of the door. No reason was given as to why Vice Federal Reserve Chairman Murat Cetinkaya had to vacate his chair. His successor has already been determined. According to the official gazette, the banker Mustafa Duman was appointed to the post.
The Turkish lira fell by around 13 percent after Erdogan dismissed central bank chief Naci Agbal on March 20 – two days after a sharp rise in interest rates. Agbal was replaced by Sahap Kavcioglu, an ex-banker, ex-member of the ruling party and declared opponent of a tight monetary policy. This is the third time that the central bank governor has been removed from his post since mid-2019. Agbal had previously raised key interest rates from 17 to 19 percent in the fight against double-digit inflation. Higher interest rates strengthen the local currency, which makes imports cheaper and thus curbs inflation.
Agbal’s dismissal had caused considerable turmoil in the financial markets and fueled fears that Turkey might return to unorthodox economic policies and rapid rate cuts. The inflation rate in February was 15.6 percent. Cetinkaya, a former head of the Istanbul Stock Exchange, had been with the central bank since mid-2019.