Fatih Cekirge: Turkey's CB should end the stand-off with the gov't

"There is definitely a serious pessimism in the markets and I hear this said by every businessman I speak to..."

And he continues, saying:

"Of course the central bank is an independent institution. But it appears to be obstinate in its dealings with the government and this should end."

The following sentence is critical.... Whenever alarm bells start ringing in the markets, the tension between the government and the central bank rises and the debate regarding monetary policies begins. What I mean is, as the availability of money lessens the debate over it increases.

This is what Zafer Caglayan has signaled.

"The central bank is being obstinate in its dealings with the government."

- But about which issue is the central bank being obstinate?

- The markets are short of cash. The central bank is trying to combat the problem by tightening monetary policy; but, money is the life blood of the markets.

- What does this mean?

-It means that even when the economy was strong the central bank refused to lower interest rates, and now it refuses to inject money into the markets at a time when the markets need it most. For example, the bank could have purchased some foreign currency... It did not even do this.

Here lies the stand off and the division between the central bank and the government... The government wants to overcome the cash shortage by injecting money into the economy, but central bank stands firm against this... At this point, I want to put the following to the administration:

- Is either the prime minister or any government minister planning to discuss these issues with the governor of the central bank?

-Of course, the prime minister gives importance to the central bank's independency, but those close to the prime minister, share these opinions on the issue with him...

And still, Turkey’s Central Bank Governor Durmus Yilmaz is being obstinate...

I asses the situation as this:

-Comments had been made about Durmus Yilmaz when he was promoted to the post of governor, such as his wife wears a headscarf and therefore he will obey every demand from the prime minister. Such comments gave Yilmaz a complex and an anxiety about having to prove his right to the post of governor.

And Governor Yilmaz is now torn between being "independent" and "unyielding".

This is the psychological explanation that for me, explains his obstinacy.