Turkey appointed a new central bank chief, a move that was unexpected and shocked most people in Turkey. The newly-appointed head of Turkey's central bank met with bank CEO's a day after his appointment. Investors and economic analysts did not expect the leadership change, and they have predicted a drop in the value of the Lira- Turkey's currency.
Sahap Kavcioglu, the new central CEO, said in a statement that he will ensure banks enforce policies that will reduce the inflation rates that have continued to increase in the past four years. An unexpected interest rate increase led Turkey's president, Tayyip Erdogan, to fire the former central bank chief.
Şahap Kavcıoğlu is the fourth central bank CEO to be appointed since 2019
Turkey's president has sacked three central bank CEOs since the middle of 2019. Economic analysts say his recent actions have cast doubt on the credibility and reliability of the country's financial system. One analyst added that Turkey's stock market will be "bloody" at the start of the week.
Cristian Maggio, EM strategy head at TD Securities, predicted that the lira will likely fall but 10-15% during the week. Maggio added that the president's move highlights the instability of Turkey's policies especially its financial policies. He predicted that the new central bank chief will enact “looser, unorthodox, and pro-growth policies."
Kavcioglu will address the market situation with the bank CEO's
An inside source said Kavcioglu planned to discuss the situation of the market and Turkey's financial policy during the meeting with the bank CEOs. Kavcioglu is a former banker and lawmaker and he is a member of the president's political party.
According to a statement released by Kavcioglu, the central bank's policy meeting will continue to hold as scheduled, which has been translated by analysts to mean that rate cuts will not happen anytime soon. Kavcioglu believes that high rates are not a successful tactic for beating inflation and will most likely. slash rates by a high margin.