Erdogan Reshuffles Central Bank Again With New Deputy

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Turkey’s President Recep Tayyip Erdogan appointed a new deputy governor at the country’s central bank, tapping an economist and long-serving member of the institution in his latest leadership rejig.

While Erdogan’s previous sudden decisions to swap out senior positions at the central bank jolted markets, this time the lira steadied to trade 0.1% stronger against the dollar as of 10:05 a.m. local time, following only a brief drop.

Semih Tumen, a labor economist and professor of economics at Ankara-based TED University, was named to the role early on Tuesday, replacing Oguzhan Ozbas, according to a decree published in the Official Gazette.

The move comes two months after Erdogan fired Naci Agbal, the bank’s third governor in less than two years, sending Turkish markets into a nosedive. Erdogan, who holds unorthodox theories about monetary policy and its impact on inflation, also replaced deputy governor Murat Cetinkaya in March.

Tumen has worked in different roles at the central bank for 16 years until 2018, leaving the monetary authority after serving as a director general in charge of the structural economic research department. Since then, he’s been an adviser at the Turkish presidency’s human resources office.

Four of seven members of Turkey’s rate-setting committee now have less than a year of experience at their jobs, including new Governor Sahap Kavcioglu.

The decision to fire Agbal, who had sought to restore the central bank’s credibility, had set off a swift reversal of investor enthusiasm. The new governor has pledged policy continuity after his appointment and kept interest rates unchanged for a second month in May.

Inflation, Lira

Still, annual inflation is near a two-year high and the lira has lost about 14% against the dollar since Agbal was ousted. Public support for Erdogan’s ruling AK Party meanwhile hit a record low last month, according to prominent pollsters, amid disenchantment with the government’s handling of the economy.

Ozbas, the most recently ousted deputy governor, was appointed in July 2019, when Erdogan’s son-in-law Berat Albayrak was overseeing the economy as treasury and finance minister.

Last November, he criticized the central bank policies under former Governor Murat Uysal after working as his deputy, saying backdoor policy tightening toward the end of last year was “unnecessarily complicating the monetary stance.”

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