Erdoğan replaces Central Bank governor following interest rate hike

Naci Ağbal (Photo: AA)

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President and Justice and Development Party (AKP) Chair Recep Tayyip Erdoğan has replaced Naci Ağbal as the governor of the Central Bank with Şahap Kavcıoğlu.

The decision came after Thursday's (March 18) interest rate hike by 200 basis points. The country's policy rate currently stands at 19 percent, among the top 10 in the world.

According to the Presidential Decree published in the Official Gazette early today (March 20), Ağbal's dismissal was based on article 35 of the Statutory Decree No. 375 and article 2 of the Presidential Decree No. 3.

Erdoğan has long opposed higher interest rates and which he claims cause higher inflation.

Ağbal's appointment in November was perceived as a step back from this unconventional theory as the Central Bank has raised the policy rate by a cumulative 875 basis points since then.

"Hot money owners in London"

His successor Kavcıoğlu is an economist and a columnist at pro-government daily Yeni Şafak, which criticized the interest rate hike on its front page yesterday.

"On whose behalf did you make this operation?" the newspaper asked in the headline addressing Ağbal and said in the article that the decision would benefit the "hot money owners in London."

"While the world is trying to decrease the interest rate effect on the economy, the Central Bank in Turkey, turning a deaf ear to 83 million people, increased the interest rate from 17 to 19 percent," the newspaper wrote.

Kavcıoğlu has become the third governor of the Central Bank in less than two years as his successors Naci Ağbal and Murat Uysal were dismissed after four-and-a-half months and 16 months at the office, respectively.

Kavcıoğlu, 54, previously served as an MP from the AKP between November 2015 and May 2018. He also worked at various positions at the state-run Halkbank. (EKN/VK)