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Turkish government interference in Central Bank independence: Chief Economist Hakan Kara dismissed

Turkey’s ruling Justice and Development Party (AKP) continue to interfere with the independence of its central bank as the bank’s Chief Economist Hakan Kara and some department managers are dismissed one month after sacking its governor.

According to a document seen by Reuters, AKP decided to fire top bureaucrats at an internal bank meeting in order to reorganize the institution for better functioning.  The decision came after Turkish President Recep Tayyip Erdogan’s comment in July that the bank needed to be overhauled.

The decision was part of a reorganization to make the bank more effective, according to the document, and was taken at an internal bank meeting.

The recent purge in the Central Bank of the Republic of Turkey (CBRT) is seen as part of President Tayyip Erdogan’s economic policy, as he said in July that Turkey could face serious problems if its central bank is not completely overhauled after the dismissal of governor Murat Cetinkaya.

The bank’s Research and Monetary Policy General Manager Pinar Ozlu, Markets General Manager Orhan Kandar, and Banking and Financial Institutions General Manager Yavuz Yeter, were also dismissed, the document showed. More than 10 economists were fired from Central Bank, and the document did not identify a new Chief Economist.

“This is really disappointing. Hakan Kara was a very good economist and a decent human being who was the front person for most foreign investors who visited the CBRT for the past 20 years,” Timothy Ash, head of emerging market research at Blue Bay Asset Management tweeted.

President Erdogan sacked CBRT Governor Murat Cetinkaya as he raised the interest rate by 625 percent to stem a currency crisis and resisted reducing the interest rate. Erdogan says that inflation will come down when interest rates are lowered.

Following the central bank decision, Turkish lira TRYTOM=D3 stood at 5.4970 against the dollar at 0830 GMT, weakening from a close on Thursday of 5.4700, Reuters figured.

Turkey’s Central Bank governor sacked for resisting 300 point rate cut – report

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