Turkey’s latest overhaul puts jobs economist at central bank

Turkey’s President Tayyip Erdogan replaced the central bank’s fourth policymaker in the last two months on Tuesday, naming a respected labor market economist to its ranks as the country strains to get back to work after the pandemic.

Semih Tumen, economics department head at Ankara’s TED University who previously worked at the bank from 2002 to 2018, was named in an official decree published overnight to replace Oguzhan Ozbas as one of four deputy governors.

Four of the seven members of the monetary policy committee have been ousted since March 20 when Erdogan shocked financial markets by replacing Naci Agbal, a hawkish and market-friendly governor, with new chief Sahap Kavcioglu.

Though the central bank’s credibility has been hurt by rapid leadership turnover in recent years, the lira was little changed after the latest shake-up at 8.39 to the dollar at 0718 GMT.

Analysts said the move would have little immediate impact on policy, which is expected to loosen in the second half of the year as inflation falls from above 17% currently.

Agbal raised the key rate to 19% in March just before being fired.

Tumen, a research fellow at the Institute of Labor Economics whose work has been published internationally, will add market credibility as the economy rebounds from coronavirus fallout, analysts said.

“He is an esteemed economist whose name is known in the market. I think his contribution will be strong,” said a central bank staffer who requested anonymity.

A Turkish banker said: “His name is known in the market [and given] his macro knowledge he will be prominent in the MPC.”

The presidential decree published in the official gazette gave no reason for hiring Tumen, who was also an adviser to Erdogan and whose last job at the bank was executive director of its structural economic research department.

His research on jobs, migration and refugees could assist the bank: A coronavirus-related ban on layoffs has kept unemployment stable at around 13% but workers, especially informal ones, have been hit hard by pandemic fallout.

A measure of labor under-utilisation soared to peaks in May 2020 and again earlier this year. Presidential elections are set for 2023 and Erdogan has stressed the need to get Turks back to work.

Markets tumbled after Erdogan named Kavcioglu, a ruling party member and former critic of tight policy, as governor in March.

The lira has since remained near a record low, keeping pressure on inflation via Turkey’s heavy imports. [Reuters]