Jan 30, 2023
Erdogan Rivals Vow to Make Turkish Central Bank Independent
Turkey’s opposition parties said they would ensure an “independent” central bank that would focus on curbing rampant inflation if they defeat President Recep Tayyip Erdogan’s party in May elections.
The monetary authority’s sole responsibility should be price and financial stability, and the president will no longer be able to fire governors at will, according to a policy road map unveiled by the six-party bloc on Monday.
Erdogan Ousts Central-Bank Head, Installs Interest-Rate Ally
The pledges are among hundreds the so-called Nation Alliance is promising if they beat Erdogan’s AK Party and its allies in less than four months. It’s also the first time the parties have jointly detailed how they will change Turkey’s economic policies — a key issue after inflation reached nearly a quarter-century high last year of 85%.
The central bank delivered a series of interest cuts and lowered the benchmark to 9% under Erdogan’s explicit call, contrary to orthodox economic thinking.
Turkish Rate Cuts Are Back on Agenda as Policy Bias Shifts Again
The opposition said it would lower inflation to single digits within two years. Free market principles in the foreign-exchange market will be enforced and practices that “violate the floating-exchange rate system” will end, the parties said.
Bloomberg Economics estimates the central bank made back-door currency market interventions of as much as $108 billion last year to make sure the lira remained stable against rate cuts.
Other promises include ending a government-backed lira savings program that protects against exchange-rate volatility as well as strengthening central bank reserves.
Erdogan, a self-styled “enemy of rates,” still remains one of the most popular politicians in the country. The opposition bloc has yet to announce a contender to run against Erdogan.
Turkish Opposition to Reveal Presidential Candidate Mid-February
(Updates with context starting in third paragraph.)
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