Erdogan Dismisses Turkey's Central Bank Governor

Turkey's President Recep Tayyip Erdogan unexpectedly dismissed the head of the Central Bank of Turkey today, just two days after a sharp interest rate hike aimed at curbing inflation. He replaced him with a former lawmaker from the ruling party who has criticized strict monetary policy, according to Reuters.

This marks the third instance since mid-2019 that Erdogan, who has repeatedly called for lower interest rates, has removed a central bank chief. Analysts had predicted that the lira would collapse when markets reopened, as trust in the bank has deteriorated once again.

Naci Agbal, who was appointed just under five months ago, had earned market praise for aggressively raising the interest rate by 875 basis points to 19 percent, the highest among major economies. His unexpected dismissal came shortly after the bank raised rates by more than 200 points on Thursday.

The country's official newspaper announced that Erdogan has replaced him with Sahap Kavcioglu, a former MP from the ruling Justice and Development Party.

The lack of monetary independence has exacerbated rampant inflation and Turkey's record devaluation of currency, and has hindered efforts to control inflation in double digits over the past four years, economists say. Since 2018, the lira has lost half its value.