ANKARA, June 4 (Reuters) – Turkey’s highest court has annulled the president’s power to fire central bank governors before the end of their terms, according to a decision published in the Official Gazette on Tuesday.
Following an appeal filed by the main opposition party, the CHP, the Constitutional Court overturned a 2018 decree by Recep Tayyip Erdogan, which authorized the president to appoint and dismiss governors and vice-governors of the Central Bank.
The issue should be regulated by law, the court said, adding that its decision would take effect in 12 months, giving Parliament time to legislate on the subject.
Recep Tayyip Erdogan has fired five governors of the bank over the past five years, undermining the institution’s independence, raising fears about its dysfunction and leading to policies that have weakened the lira and sent the value soaring. soaring inflation.
In February, Recep Tayyip Erdogan appointed Fatih Karahan, a former vice governor who continued an aggressive regime of monetary tightening that began with a dramatic policy reversal in June last year.
The main policy rate was raised to 50% from 8.5% a year ago, sparking renewed interest from foreign investors and increasing domestic demand for lira. The central bank expects year-on-year inflation to fall below 40% by the end of the year, down from 75% last month.
Fatih Karahan reaffirmed on Tuesday that the bank would continue to pursue a strict policy until inflation falls and reaches its targets. (Reporting by Huseyin Hayatsever and Ece Toksabay, with contributions from Nevzat Devranoglu; French version Mathias de Rozario, editing by Kate Entringer)
