ANKARA: Turkey’s top court has annulled the president’s authority to sack central bank governors before their terms end, a ruling published in the Official Gazette said on Tuesday, possibly heralding more stability after years of turnover at the bank’s helm.
After a challenge by the main opposition party CHP, the Constitutional Court annulled a decree law issued by President Tayyip Erdogan dated 2018, which had authorised the president to appoint and fire bank governors and deputy governors.
The issue should be regulated by law, the court said, adding its decision would be effective in 12 months, giving parliament time to pass a law in the interim.
Erdogan has fired five bank governors over the last five years, eroding the institution’s independence, sowing concerns about dysfunction and leading to easy-money policies that had undermined the lira currency and sent inflation soaring.
In February, Erdogan appointed current chief Fatih Karahan, a former deputy governor who has continued an aggressive monetary tightening regime that began with a dramatic policy turnaround in June last year.
The main interest rate was hiked to 50% from 8.5% a year ago, attracting renewed foreign investor interest and raising domestic demand for lira. The central bank expects annual inflation to drop below 40% by year-end, from 75% last month.
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