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Daniel Moss

Running Turkey’s Central Bank Is a Most Perilous Assignment

Erdogan’s sacking of governor Naci Agbal heralds a course correction. The new interest-rate chief will have to be careful to survive in the job.  

A rate hike too far for Naci Agbal.

A rate hike too far for Naci Agbal.

Source: Bloomberg

Updated on

Four months of monetary orthodoxy appears to have been too much for Recep Tayyip Erdogan.

In firing central bank chief Naci Agbal and installing a champion of low interest rates, Turkey’s president has blessed the withdrawal of at least some of the tough medicine Agbal meted out in his four-month tenure. His replacement, Sahap Kavcioglu, has been critical of the course his predecessor pursued. Erdogan is also prepared to undermine the relative stability that Agbal’s successive — and aggressive — rate increases brought to the Turkish lira. Soaring inflation gave the departing central bank chief little choice; it won’t abate just because there’s a new governor in town.