DAVOS, Switzerland – Turkish central bank Governor Durmus Yilmaz said yesterday Turkey could ride out the storm on global markets, but that it would be a disaster to relax fiscal discipline. «If we don’t make any mistakes in terms of monetary policy and fiscal policy (and) if we do the right thing and maintain confidence, I think we will ride out the current problems and will not be affected by it,» he told Reuters on the sidelines of an annual business and political summit sponsored by the World Economic Forum in the Swiss ski resort of Davos. Turkish stocks have fallen more than 20 percent this month amid a global sell-off prompted by fears of recession and credit losses. The lira, supported by the highest interest rates in mainstream emerging markets, has lost just 4 percent. Yilmaz said current monetary policy was «very tight,» even though the bank has cut its benchmark borrowing rate five times since September to 15.50 percent. After Tuesday’s surprise interest rate cut by the US Federal Reserve, Yilmaz said in a separate interview with CNBC-e that other central banks should remain cautious. «None of the central banks should ease up on their caution. The situation after the Fed’s decision is not one of ‘They made it easier for us, let’s cut rates too,’» he said. «For us, a lack of fiscal discipline, a loosening, would be a disaster,» he told the Turkish broadcaster. In mid-2006, during a major sell-off which knocked 25 percent off the lira’s value, the central bank hiked rates by a combined 425 basis points – which it only started to unwind in September. Yilmaz said he did not agree that emerging market countries could protect themselves from the problems in the United States, but said the degree of impact would vary from country to country. He said Turkey, whose stock market free-float is some 70 percent foreign-owned, was more likely to be influenced by global developments through portfolio and credit channels than through trade. Foreigners also have large Turkish bond holdings. He called for worldwide coordinated action by central banks to address financial market stresses. «Coordination, nationwide and worldwide, is what is needed at the moment,» Yilmaz told Reuters.