Turkey’s central bank is independent of government and will take all necessary steps

Turkey’s central bank is independent of government and will take all necessary steps, Finance Minister Berat Albayrak told Reuters, defending an institution that has not raised its benchmark rate in nearly three months despite a currency crisis.

The bank will hold its next rate-setting meeting on Sept. 13, after leaving rates on hold in late July. Since then, it has responded to the lira’s plunge to record lows in August by tightening liquidity.

The bank said on Monday it would take necessary actions to support price stability and it would adjust its monetary stance at next week’s meeting. The statement came after inflation surged to nearly 18 percent year-on-year in August.

Speaking late on Sunday, Albayrak said that the bank, at its last meeting, said it would look at the markets and at price stability and “would not hesitate to take the necessary steps”, in coordination with government fiscal measures.

He also said that, since President Tayyip Erdogan’s re-election in June with wider powers, monetary and fiscal policy were closely aligned, strengthening the bank’s hand.

The lira has fallen some 40 percent against the dollar so far this year, hit by concerns about the influence over monetary policy exerted by Erdogan, who opposes raising interest rates despite double-digit inflation.

“The central bank in Turkey has been maybe more independent than those in other countries, and it will continue this period by taking steps to continue this independence,” Albayrak said. (Reuters)