Turkey: Simsek says no change to central bank independence

The bank will continue to independently employ monetary policy tools, deputy Prime Minister Mehmet Simsek says.


There will be no change in the independent status of the Turkish central bank, Deputy Prime Minister in charge of the economy Mehmet Simsek said in a tweet on Wednesday.

A minor change in the definition of  the role of the Central Bank of the Republic of Turkey in the new government's program, announced on Wednesday, had spurred reports that it could lead to limits on the banks independence.

In the previous government program, the definition of the role of the bank read: "The central bank will continue to independently employ monetary policy and monetary policy instruments to ensure price stability." But the new government program read: "The central bank will directly employ monetary policy instruments to ensure price stability ."

Simsek however, affirmed the bank's independence. Simsek said that the bank would continue to use monetary policy instruments independently to accomplish its mandate of ensuring price stability. 

The main task of the central bank is to ensure price stability. It will continue to independently employ monetary policy tools,” he said.

The change in the government's wording of the central bank's mission, as stated in the government program, spurred rumors on financial markets on Wednesday.

The Turkish lira lost ground against the dollar shortly after the government's announcement, with the lira rising to 2.9046 in morning trading from 2.8852 in less than an hour. 

After Simsek’s tweet,  the lira recovered half of its losses against dollar, trading close to 2.8930.