Two days after a bigger-than-expected increase in interest rates, Turkey’s President Recep Tayyip Erdogan removed the country’s third central-bank governor in less than two years, and replaced him with an advocate of lower rates.
Erdogan fired Governor Naci Agbal, who was appointed in November, and gave the job to Sahap Kavcioglu, according to a decree published after midnight on Saturday in the Official Gazette. Agbal’s abrupt removal comes on the heels of a 200 basis-point interest-rate hike by the central bank on Thursday, double what was expected in a
Bloomberg survey.
Agbal took the job as Turkey’s top banker after weeks of declines in the lira and raised the benchmark one-week repo rate by a cumulative 875 basis points since, boosting the central bank’s damaged credibility among investors. Erdogan, who backs an unconventional theory that high rates cause inflation, has for years frequently chastised the central bank when he thought it was setting borrowing costs too high.
