Turkey In Turmoil Again: Erdogan Fires Second Central Bank Chief In 4 Months, Sparking Foreign Capital Panic | WHAT REALLY HAPPENED

Turkey In Turmoil Again: Erdogan Fires Second Central Bank Chief In 4 Months, Sparking Foreign Capital Panic

On Thursday, moments after the Central Bank of Turkey unexpectedly hiked rates by a whopping 200bps - double the consensus expectation - to 19% from 17%, the highest rate since the country's panicked scramble to contain the collapse of the Turkish lira during the economic turmoil of 2018, we said that "unfortunately for Turkey - whose economy will now grind to yet another halt - it had no choice: inflation had accelerated for a fifth month in February as oil rallied and the impact of last year’s lira weakness lingered, while capital outflows soared. The upward trend fueled expectations the central bank would try to rein in prices by raising interest rates... but nobody had expected a 200 bps rate hike."

Also in our kneejerk response to the rate hike decision, we said that the relatively new CBRT head, Agbal, "was damned if he did and damned if he didn't: on one hand the lira was plunging angering Erdogan, so he had to stabilize it... on the other the only way to do so was by hiking rates, which would anger Erdogan even more."

We also quoted from the CBRT's decision, noting that the bank has decided “to implement a front-loaded and strong additional monetary tightening,” explicitly stating that this "statement is guaranteed to enrage Turkey's dictator."

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