Markets welcome appointment of new Turkish central bank governor

Markets reacted positively to the appointment of Murat Çetinkaya as the new governor of the Central Bank of the Republic of Turkey (CBRT) on Monday, with the compound interest rate of the two-year benchmark bond hitting 9.57 percent - the lowest level in 11 months. The interest rate on the two-year benchmark bond was being traded at 9.97 percent on Friday last week. Also, the 10-year benchmark bond rate saw its lowest level with 9.65 percent. Analysts attributed these decreases to the elimination of uncertainty, which led to increased demand for assets denominated in Turkish lira, also backed by the positive atmosphere in the global markets. The CBRT's interest rate policy has been criticized by some officials, including President Recep Tayyip Erdoğan. Keeping interest rates high was the main critique since it is seen as a block to investment. The relationship between interest and inflation is also being discussed by economists, since despite the high rates, the CBRT was unable to hit its target inflation level several times. The new governor's rate policy will be followed closely by the markets.

Speaking at a meeting in Ankara on Monday evening, Economy Minister Mustafa Elitaş said Çetinkaya's appointment as an experienced name in the field was welcomed very positively by domestic markets. As the monetary policymaker, the CBRT's new governor was an issue of concern, and domestic markets' positive perception of Çetinkaya is expected to enhance confidence in the CBRT.

Prime Minister Ahmet Davutoğlu asked the government to appoint Çetinkaya, who was formerly the CBRT vice governor. Deputy Prime Minister Numan Kurtulmuş announced that Çetinkaya received the Cabinet's approval at the meeting held on April 11. The term of current CBRT Governor Erdem Başçı will end on April 19, after which he will be appointed as Turkey's ambassador to the Organisation for Economic Co-operation and Development (OECD).

Born in 1976, Çetinkaya studied political science, international relations and sociology at Boğaziçi University. He received his master's degree at Boğaziçi as well, and is currently writing his doctoral dissertation on international finance and political economy there as well. Çetinkaya started his career in the international banking and treasury divisions of Albaraka participation bank, and he later joined semi-public Halkbank in 2003, where he rose to the rank of vice general manager in charge of international banking and investor relations. He also held board member duties in several ventures of the bank. He served as vice general manager in Kuveyt Türk participation bank from 2008 to 2012 until he was appointed as the vice governor of the CBRT.