News of change in Turkey’s economy administration and monetary policy management

At the weekend, we monitored two important developments in terms of monetary policies and economy administration:

·        Central Bank of the Republic of Turkey Gpvernor Murat Uysal sacked of taking by President’s decision published on Official Gazette, replaced by former finance minister Mr. Naci Ağbal.

Minister of Treasury and Finance Minister Mr. Berat Albayrak resigned, according the statement on his Instagram account. No official statement has been made on this subject.

In terms of economy administration; It is important whether Mr. Albayrak's resignation will be official or not, and if so, who will replace him. These developments have the potential to create radical changes in economy administration and monetary policies. At the top of this are the solutions that can be brought to the issue of the ongoing TRY depreciation and the unconventional monetary policy moves that cannot stop this depreciation.

Ağbal met with bank managers at the weekend. It was probably a meeting where the demands of the sector, especially the asset ratio, were discussed. In the statement Mr. Ağbal made as of Monday, he said, "The current situation and expectations will be reviewed and developments will be closely monitored until the Monetary Policy Committee Meeting to be held on November 19, 2020" and said that the necessary policy decisions will be taken with the current data and final evaluations. Emphasis was placed on the purpose of price stability, determination of using all tools, and the strengthening of monetary policy communication within the framework of the principles of transparency, accountability and predictability.

In order to make predictions about the shaping of economic policies and their coordination with monetary policy, It should be seen whether Mr. Albayrak's resignation will become official and if he resings, who will be the next minister. The change in the management of the Central Bank strengthens the expectation for a return to traditional monetary policies. Mr. Ağbal's first official statement is that the current situation will be evaluated until November 19, so the possibility of an extraordinary meeting is eliminated at this stage.