Turkish President Recep Tayyip Erdogan has removed another central bank governor after only a few months in the job, state news agency Anadolu reported Saturday.
Sahap Kavcioglu, a former member of Erdogan’s ruling Justice and Development Party (AKP), replaced Naci Agbal as governor, the report said.
The sudden overnight decision came just a few days after the central bank raised the key interest rate by two points to 19 per cent, to help reign in high inflation and support the weak lira currency.
Following weeks of currency depreciation Erdogan had hand-picked Agbal to replace Murat Uysal as governor in early November. Uysal had held the office for little more than a year.
Agbal had since tried to get high inflation under control by raising interest rates, by 8.75 percentage points in total.
Shortly after his removal, Agbal thanked Erdogan on Twitter for having had appointed him. “I also extend my gratitude for my removal as of today,” Agbal wrote, without further comment.
Markets had expected the hawkish Agbal would help restore the central bank’s credibility after months of burning through Turkey’s foreign exchange reserves to defend the ailing lira.
Erdogan, on the other hand, has repeatedly advocated low interest rates, often describing the key rate as the “mother of all evils”.
The annual inflation rate rose to more than 15 per cent last month.
Facing political pressure over the economy, Erdogan announced economic reforms last week. He promised tax exemptions and cheap loans for small businesses that have been are particularly hard hit by the coronavirus pandemic.
In July 2019, Erdogan had chosen Uysal to lead the central bank, saying his predecessor Murat Cetinkaya had failed to follow instructions on interest rates.