Turkey’s central bank met on Tuesday for the first time since President Recep Tayyip Erdogan was re-elected with enhanced executive powers. Though many expected the bank to raise interest rates to prop up the struggling lira, it decided instead to leave rates unchanged, causing the currency to fall once again – this time by 4 percent relative to the dollar before recovering slightly. Erdogan has long supported cutting interest rates to encourage borrowing and boost investment. And his new powers, which include appointments to the central bank, give him even more influence in this regard. But the bank’s decision not to cut rates puts into question how much power the president really has over monetary policy.
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Specifically, Erdogan’s new powers enable to appoint the central bank governor. (Previously, the president, prime minister and deputy prime minister jointly appointed the central bank governor, but under Turkey’s new executive presidential system, t