Turkey’s Central Bank Chief Steps Down Amid Long Inflation Battle

Turkey’s Central Bank Chief Steps Down Amid Long Inflation Battle

President Recep Tayyip Erdogan of Turkey appointed a new central bank governor early Saturday, hours after the abrupt resignation of his previous appointee, who said she was stepping down because of “a major reputation assassination campaign.”

The departing central bank chief, Hafize Gaye Erkan, was the fifth in five years, and the first woman to hold the post. The bank’s deputy governor, Fatih Karahan, was swiftly promoted to take her place.

The surprise change-up came about eight months into a shift in Turkey’s economic program aimed at taming a yearslong cost-of-living crisis that has been painful for many Turks. Annual inflation as of last month was about 65 percent.

In an apparent effort to reassure investors, senior officials said that Ms. Erkan’s departure did not signal a change in policy.

Turkey’s finance minister, Mehmet Simsek, described Ms. Erkan’s departure as a personal decision and said that she would be replaced by “a well-respected macroeconomist with an extraordinary depth of knowledge and expertise.”

He and Vice President Cevdet Yilmaz said that Mr. Erdogan continued to back the economic team and its policies.

Starting in 2018, Mr. Erdogan oversaw a policy of continually lowering interest rates, even as the value of Turkey’s currency plummeted and inflation soared. That flew in the face of conventional economics, which calls for raising interest rates to thwart inflation.

After winning re-election in May, Mr. Erdogan signaled a shift in approach by appointing Ms. Erkan and Mr. Simsek, who brought Turkey back toward orthodox policies. The central bank has since repeatedly raised interest rates, which last month reached 45 percent.

The new central bank chief, Mr. Karahan, holds a doctorate in economics from the University of Pennsylvania, has taught at Columbia University and New York University, and worked as an economist for Amazon, according to his official central bank biography. He has served on the bank committee that sets interest rates since July.

Ms. Erkan’s appointment was initially welcomed because her background, which included stints at Goldman Sachs and First Republic Bank in the United States, suggested that she would pursue conventional monetary policies.

But she had been stalked by rumors since a Turkish newspaper reported that her father, who has no official role at the bank, had intervened in its operations, an accusation that the bank denied.

In a statement posted online late Friday, Ms. Erkan defended her record, saying that her approach had begun to bear fruit, but that she was stepping down to protect her family and infant child.


Kyle C. Garrison

Related Posts

Read also x