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Turkish central bank’s head can be sued for high inflation

Türkiye Materials 17 February 2015 16:36
A prosecutor in Turkey filed a lawsuit against the head of the country's central bank, Erdem Basci.
Turkish central bank’s head can be sued for high inflation

Baku, Azerbaijan, Feb. 17

By Rufiz Hafizoglu - Trend:

A prosecutor of a court in Ankara, Serif Aydin, filed a lawsuit against the head of Turkey's central bank, Erdem Basci.

Turkish news channel Haber7 reported that the prosecutor accuses Basci of serious material damage inflicted to Turkey's citizens as a result of an erroneous interest rate policy of the central bank.

The prosecutor said that, in case of a trial, the Turkish central bank's head can be imprisoned for up to two years.

On Feb. 10, Turkey's President Recep Tayyip Erdogan criticized Basci's work, saying that if the central bank's head can't cope with his duties, he will be held accountable.

"Despite the fact that the government has repeatedly demanded that the central bank lowers the main interest rates, the regulator hasn't until today responded to this demand," said Erdogan.

He said it is the inflation, which is due to high interest rates, but not the other way around.

However, Turkey's deputy prime minister for economic affairs, Ali Babacan, said the central bank pursues right monetary policy.

Turkey's central bank on Jan. 20 lowered its key interest rate (the weekly repo rate) by 0.5 percentage points to 7.75 percent, while the other two rates, that is one on deposits and the other one on overnight loans, were left at 7.5 and 11.25 percent respectively.

Earlier, Basci said the central bank expects in 2015 the minimum level of inflation in Turkey over the past 45 years.

He said it is expected that this year the consumer price index in Turkey will stand at 5.2 percent, and in 2016 - at five percent.

"The central bank will do everything possible to keep inflation under control," said Basci.

The inflation rate in Turkey was 8.31 percent in 2014.

The official exchange rate on Feb. 17 is 2.4569 TRY/USD.

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Follow the author on Twitter: @rhafizoglu

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