Erdem Basci, Turkey’s new central bank governor, said he shared the goals of securing price and financial stability with his predecessor.
“Your vision is our vision,” Basci told outgoing Governor Durmus Yilmaz during a handover ceremony today in Ankara. Basci said he aimed to make the bank a leading monetary authority globally.
Basci, a 44-year-old school friend of Deputy Prime Minister Ali Babacan, is trying to arrest a boom in lending and domestic demand without increases in the benchmark interest rate, which the central bank has held steady since cutting it to a record low of 6.25 percent in January. Bank lending is fueling demand for imports, which may push the current-account deficit to 8 percent of economic output this year, according to an International Monetary Fund estimate.
Central bank governors are appointed by governments and need to “do our work without letting gratitude turn to subservience,” Yilmaz said at the ceremony. “Otherwise we damage the aims of those who appointed us.”
The bank’s rate-setting committee meets under Basci on April 21 and is likely to keep the benchmark one-week repo rate unchanged, according to all 11 economists in a Bloomberg survey.
To slow loan growth, the bank has increased the reserve requirements banks must set aside against their liabilities to as much as 15 percent from 6 percent for short-term deposits. It has also stopped paying interest on the reserves to banks.
The policy is starting to work, Basci said last week in Washington, according to a paper posted on the bank’s website at the weekend.
Source: http://www.businessweek.com
“Your vision is our vision,” Basci told outgoing Governor Durmus Yilmaz during a handover ceremony today in Ankara. Basci said he aimed to make the bank a leading monetary authority globally.
Basci, a 44-year-old school friend of Deputy Prime Minister Ali Babacan, is trying to arrest a boom in lending and domestic demand without increases in the benchmark interest rate, which the central bank has held steady since cutting it to a record low of 6.25 percent in January. Bank lending is fueling demand for imports, which may push the current-account deficit to 8 percent of economic output this year, according to an International Monetary Fund estimate.
Central bank governors are appointed by governments and need to “do our work without letting gratitude turn to subservience,” Yilmaz said at the ceremony. “Otherwise we damage the aims of those who appointed us.”
The bank’s rate-setting committee meets under Basci on April 21 and is likely to keep the benchmark one-week repo rate unchanged, according to all 11 economists in a Bloomberg survey.
To slow loan growth, the bank has increased the reserve requirements banks must set aside against their liabilities to as much as 15 percent from 6 percent for short-term deposits. It has also stopped paying interest on the reserves to banks.
The policy is starting to work, Basci said last week in Washington, according to a paper posted on the bank’s website at the weekend.
Source: http://www.businessweek.com
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