Interest rate row: will the central bank prevail?
In the lira crisis the Turkish central bank in Ankara raised the interest rate from 17.75 percent to 24 percent on Thursday - a more drastic increase than experts had expected. Shortly before this Erdoğan had once again called for interest rates to be lowered and criticised the central bank. Commentators ask how independent the bank really is, and whether it will be able to continue defying the Turkish president in the long term.
Interest lobby scores a supposed victory
Journalist Melih Altinok vents his anger over the central bank's decision in the pro-government daily Sabah:
“Yesterday the Central Bank did what [external players] were demanding of it. ... Now those who joked so idiotically about the 'interest lobby' are optimistic. Some of them are even saying that the Central Bank has 'proven its autonomy'. I hope that this will be the last laugh of those who point to the high dollar as a reason for raising the interest rates. Because every increment by which the interest rate is raised lowers the investment, employment and growth rates. Or in other words, it endangers the future of Turkey - and consequently also of the Central Bank.”
A risky game
A central bank that is independent only on the surface makes the situation even riskier, writes the Süddeutsche Zeitung:
“This is not our crisis, says Recep Tayyip Erdoğan, who sees Turkey as the victim of 'manipulations'. ... Shortly afterwards the Turkish bank did what it had to do: increase the interest rates - and much more than expected. ... The monetary authorities did what Erdoğan wanted to avoid at all costs. The president sees interest rates as the root of all evil. The double-dealing between the bank and the president is remarkable. Shortly before the decision to raise interest rates is announced the president says he is against it, and in this way the bank demonstrates its independence. This is a risky game. Because many of the problems of the Turkish crisis are self-inflicted, although admittedly not all of them. It is the political system that is weakening the economy.”
Turkish nest of resistance won't be spared
President Erdoğan will soon take the central bank to task too, Der Standard suspects:
“Although the Turkish central bank is officially independent the head of state has reserved the right to appoint the leading central bankers. How much longer Erdoğan will put up with this nest of resistance is unclear right now. The central bank has often raised the sultan's ire. He's the head of the state, the military and - since recently - the chairman of the Sovereign Wealth Fund, and he has put close allies in all kinds of top posts in recent months. It would be a small miracle if the central bank were to be spared the effects of the struggling ruler's megalomania.”