Turkish PM Davutoğlu holds hasty meeting with Central Bank head on return from New York

ANKARA

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Prime Minister Ahmet Davutoğlu has held meetings with the chiefs of key monetary and financial institutions, including the Central Bank governor, shortly after returning from New York where he had sought to assure investors spooked by President Recep Tayyip Erdoğan’s recent tirades against the Central Bank.

Upon his arrival earlier in the evening of March 7, Davutoğlu summoned Central Bank Governor Erdem Başçı, Capital Markets Board (SPK) head Vahdettin Ertaş, and Treasury Acting Undersecretary Cavit Dağdaş, for separate meetings at the Prime Ministry office, sources from the office told state-run Anadolu Agency. He was accompanied by Babacan.

Last week, Davutoğlu, accompanied by Deputy Prime Minister Ali Babacan and Finance Minister Mehmet Şimşek, met fund managers and bankers in New York in an attempt to allay concerns about the Turkish Central Bank’s independence, fuelled by President Erdoğan’s harsh criticism of the Bank and its interest rate policies.

The Turkish lira hit a record low of 2.647 to the dollar on March 6 after a week of losses, weighed on by demands from Erdoğan that the Central Bank should cut interest rates more sharply. At one point he said that anyone who defended high rates was guilty of “treason.”

Davutoğlu’s March 8 meetings focused on developments in domestic and foreign markets, in light of his meetings with foreign investors in New York, sources said.

Başçı reportedly briefed Davutoğlu about his upcoming March 9 meeting in Basel, Switzerland, where the central bank governors of many large economies will meet to discuss global economic developments.

Speaking in the southern Turkish province of Gaziantep on March 7, President Erdoğan referred to criticism of his severe recent rebukes of the Central Bank.

“They tell me ‘You are criticizing the Central Bank too much.’ Let the Central Bank come forward and resolve this problem. It is the one to resolve it. Am I supposed to resolve it?” he said at a gathering with representatives of civil society organizations in Gaziantep.

Erdoğan also warned those who he said have been trying to “create dollar riches” through the slide of lira against dollar.

“Next week we will do whatever it takes,” he said, indicating his intention to tone down his fierce rhetoric against high interest rates, which has fuelled uncertainty about the future of Başçı and economy tsar Babacan, who are both seen as anchors of economic stability.