Late yesterday evening, Wednesday, October 13, US President Recep Tayyip Erdogan dismissed three members of the Turkish Central Bank’s interest rate setting committee after meeting with Bank Governor Kavcioglu, which put pressure on the Turkish lira to hit a new record high at 9.18.

Erdogan dismissed the Deput Governor of the Turkish Bank, Semih Tuman, Ugur Namik Koçek, and the member Abdullah Yavas, and appointed Yusuf Tuna as a member of the board and Utah Çanak as the vice president of the bank.

The Central Bank of Turkey cut interest rates on the 23rd of last September by 100 basis points to 18% after pressure exerted by Turkish President Recep Tayyip Erdogan, who dismissed three central bank chiefs in the last 20 months due to political differences and disagreement over interest rates.

Erdogan adopts the directive of the Turkish Central Bank through an economic theory contrary to all international theories, where the theory says that lowering interest rates is the way to reduce inflation and not the other way around, as seen by most economists around the world.

On an annual basis, it rose to 19.58%, the highest level since March of 2019, and the Central Bank aims to reduce it to 16% by the end of this year, while the Bank targets an inflation rate of 5% in the medium term.

Since the pace of the cuts did not satisfy the Turkish president, these dismissals came, as member Koçek abstained from voting in favor of lowering interest rates in the last meeting, while Abdullah Yavas was away in the United States of America after being infected with Covid 19 and did not vote, and therefore Erdogan’s decisions came to send a message to the head of the Central Bank and its members to follow his advice Continuing to lower interest rates.