ZuluTrade Blog

Market Recap – Erdogan interferes with the Turkish Central Bank

Market View | Monday, July 8, 2019 10:33 AM GMT

The Greek general elections and the Turkish President's decision to replace the country’s central bank governor were the most significant developments during the weekend.

Greece, the country that has demonized liberalism, experienced 6 years of contraction and 4 years of anemic growth, took 4 consecutive bail out loans from the EU and the IMF, tested the governance of the left, has now voted in favor of the center-right party of New Democracy that is leaded by the liberal Kyriakos Mitsotakis. The party took 158 out of the 300 Parliament seats.

A few weeks before the Turkish Central Bank was set to decide on its monetary policy, President Recep Tayyip Erdogan, replaced the governor. Erdogan believes that the high interest rates (currently at 24%) are fueling inflation (currently at 15.72%), forgetting that if it had not been for the significant increase of the central bank’s rates, the Turkish lira would have further decreased. Market’s reaction to the unprejudiced interference to the Central Bank’s independence was a steep fall of the lira.

Macro releases: No market moving release is expected today.


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