ANKARA
The relative calm in the foreign currency exchange markets shows that Turkey's Central Bank decision to make more than expected cuts was already widely known and revealed in the trading in the exchange markets, a senior economist said on Tuesday.
Speaking to the Anadolu Agency, Ahmet Mergen, a strategist of Destek Securities, said that the announced “measured” cut at 75 base points was widely expected according to market reactions in foreign exchange markets.
“The committee announced the maximum “measured” cut, as defined by Governor Basci, without risking the independence of the Central Bank” Mergen said.
Mergen stressed that central banks are institutions established mainly to ensure their countries' price stability and stated that expectations from central banks should be reasonable, noting there is a global misperception of the role of central banks.
“Saving the world is not the responsibility of Central Banks neither in Turkey nor in the world. If Central Banks could save the world, there would be no need for political parties or politicians,” he said.
Mergen stated that central banks are tasked to ensure price stability and keep inflation at reasonable levels, and called for understanding that Governor Basci cannot implement decisions which are not in his or his colleagues remit to perform.
Turkey's Prime Minister Recep Tayyip Erdogan and other government officials have criticized the central bank for maintaining high interest rates, a possible limiting factor for economic growth. Deputy Prime Minister Ali Babacan, the government's main authority on economics, and Finance Minister Mehmet Simsek have however supported the central bank's independence.
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