Will the new governor make major revisions to the policies of Turkey’s Central Bank
Mr. Murat ÇETİNKAYA who was appointed the new governor for Turkey’s Central Bank on April 11th 2016 is known to be of Islamic finance background as he worked for Islamic Banks such as Albaraka Turk and Kuveyt Turk, earlier.
The important issue with the Central Bank has always been the difference between TAYYİP ERDOĞAN’S Islamist inspired vision of economy and the actual performances practiced by the earlier governors.
Thus the first action to be taken by the new governor was a serious issue of interest and concern for many as CETINKAYA and his economic views were not very clear to the public. Still nothing too radical was expected of the newcomer as experts believed selection of CETINKAYA for the post was a sort of compromise between Erdoğan and PM Davutoğlu. It is known to all that unlike Erdogan, Davutoglu and his deputy in charge of the economy, Mehmet Simsek, embrace the rules of the free market economy and the conventional economic wisdom, meaning they believe in fighting inflation and not interest rates.
The first step came and Turkish Central Bank Monetary Policy Committee cut marginal funding rate by 0.50 points, in line with the expectations of the economists and analysts at banks and brokerage houses, leaving the policy rate unchanged.
The Committee, at its first meeting with the new Governor Murat Çetinkaya decided to reduce the marginal funding rate from 10.50 percent to 10.0 percent, while keeping the borrowing rate at 7.25 percent and the policy rate at 7.5 percent.
The committee released a statement saying;
“Recent data and the leading indicators show that economic activity displays a moderate and stable course of growth, decline in the global volatility has continued and global financial conditions have improved. In this respect, the Committee decided to take a measured step towards simplification.
Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the tight monetary policy stance will be maintained.”
BTT
