Deputy Prime Minister Mehmet Şimşek said on Thursday that the new governor of the Central Bank would implement a rational monetary policy that takes into consideration Turkey's needs as well as global business cycles.
Financial markets welcomed the appointment this week of the new governor of the Central Bank of Turkey (CBRT), Murat Çetinkaya, who has been a vice governor since 2012. Şimşek, who is highly respected by financial markets and in Washington to attend the IMF and World Bank spring meetings, commented: "All our friends in the central bank are capable and experienced. No doubt the bank will do its job with rational reasoning, as it has in the past." Deputy Prime Minister Numan Kurtulmuş announced that Çetinkaya received Cabinet approval at a meeting held on April 11. The term of current CBRT Governor Erdem Başçı ends on April 19 after which he will be appointed as Turkish ambassador to the Organization for Economic Co-operation and Development (OECD).
Markets reacted positively to the appointment of Murat Çetinkaya as the new CBRT governor on Monday, as the compound interest rate of the two-year benchmark bond hit 9.57 percent - the lowest level in 11 months. The interest rate on the two-year benchmark bond was traded at 9.97 percent on Friday last week.
The CBRT's interest rate policy has been criticized by some officials, including President Recep Tayyip Erdoğan. Keeping interest rates high was their main critique since it was seen as a block to investment. Since the CBRT has several times been unable to hit target inflation levels despite maintaining high interest rates, the relationship between interest and inflation is being discussed by economists. The new governor's rate policy will be followed closely by the markets. Çetinkaya has been vice general manager in charge of international banking and investor relations at semi-public Halkbank. He later served as vice general manager of the Kuveyt Türk participation bank.