Turkish Government Selects Cetinkaya as Central Bank Head

  • Nomination decree signed by government, cabinet spokesman says
  • Ruling needs President Erdogan's approval to go into effect

Turkey’s government has signed a decree nominating Murat Cetinkaya, a deputy central bank chief, to succeed Governor Erdem Basci.

The nomination of Cetinkaya, a member of the rate-setting monetary policy committee, was signed at a cabinet meeting in the southeastern province of Sanliurfa on Monday, government spokesman Numan Kurtulmus said. Prime Minister Ahmet Davutoglu and President Recep Tayyip Erdogan settled on Cetinkaya during talks, a person familiar with the matter said earlier, speaking on condition of anonymity because the announcement wasn’t public.

The cabinet’s decision must be signed by Erdogan before Cetinkaya’s appointment can take effect.

Murat Cetinkaya

Source: Turkiye Cumhuriyet Merkez Bankasi

The choice points to a compromise between Davutoglu and Erdogan. While the president and his supporters called for a candidate who favors lower borrowing costs, Davutoglu sought a governor to win investor confidence with orthodox monetary policy. Cetinkaya’s appointment as deputy governor while Erdogan was prime minister is also likely to have been a factor.

“As we understand it, his appointment reflects a compromise,” William Jackson, a senior emerging-markets economist at Capital Economics in London, said by e-mail. “Cetinkaya’s appointment, so long as it is confirmed by the government, is likely to be welcomed by the markets insofar as it suggests that Erdogan has not entirely got his way.”

‘Reassuring’

“The market will find it very reassuring to have a professional from inside the CBRT rather than a more political appointee,” said Paul McNamara, a fund manager at GAM UK. “The market was sufficiently worried about an ‘unorthodox’ candidate that the lira could strengthen from here.”

The lira traded 0.6 percent higher at 2.8322 against the dollar at 6 p.m. in Istanbul.

Basci’s term is ending as Erdogan and his advisers have stepped up their criticism of the bank’s monetary policy under his watch, repeatedly calling on policy makers to spur investment and economic growth with rapid cuts to interest rates. Economy Minister Mustafa Elitas said in an interview on Saturday that the bank should cut rates “radically” in a way that “really surprises the public.”

‘Vocal Demands’

“Cetinkaya will struggle to resist increasingly vocal demands from Erdogan and his allies for looser monetary policy,” Jackson said. “The monetary policy committee under the leadership of Basci cut interest rates in response to this pressure at various points over the past few years. It’s unclear if Cetinkaya would be able to succeed where Basci failed.”

Cetinkaya studied political science, international finance and economics at Bogazici University in Istanbul. He began his banking career at Islamic, interest-free lender Albaraka Turk and later worked for state-run Turkiye Halk Bankasi AS. He’s also worked at Islamic lender Kuveyt Turk, according to biographical information on the central bank’s website.

Cetinkaya probably has the political backing of Turkey’s ruling party due to his past roles at state-run banks and Islamic lenders, according to Tim Ash, head of emerging-market strategy at Nomura International Plc in London.

“Compromise candidate, so good that the presidency and government are working together on this -- one less potential hiccup,” Ash said in an e-mail. “A battle over the nomination would have been very market negative.”

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