Turkish President Recep Tayyip Erdoğan appointed former Wall Street executive Hafize Gaye Erkan as the central bank governor, potentially indicating a shift in his unconventional inflation-fighting policies. Erkan will be the first woman to head the Turkish central bank.
On Friday, Turkey’s newly re-elected President Recep Tayyip Erdoğan appointed former Wall Street executive Hafize Gaye Erkan as central bank governor, signaling a possible shift in his unconventional policies to fight inflation.
Erkan, a former co-CEO of First Republic Bank and managing director at Goldman Sachs, will be the first woman to head the central bank.
Starting a third term in office, Erdoğan unveiled a new cabinet on Saturday, appointing Mehmet Simsek, a former Merrill Lynch economist, as finance minister.
Simsek, who worked as finance minister and deputy prime minister in the past ruling AKP governments—is known to oppose Erdoğan’s unconventional policies of lowering interest rates to fight inflation.
Erkan, whose appointment was published in the official gazette on Friday, has taken over the post from Sahap Kavcioglu, who lowered rates even though central banks worldwide did the opposite to fight inflation.
Under Kavcioglu’s watch, the bank’s policy rate was decreased to 8.5 percent. It had been at 19 percent in 2021.
Turkey’s inflation rate dropped below 40 percent in May for the first time in 16 months.
The Turkish lira, which the central bank propped up before the presidential election in May, sank to a new low against the dollar on Wednesday.
Analysts say investors are less interest in how talented the new economic team is than their ability to resist pressure from Erdogan, who once called high rates “the mother and father of all evil.”
Miroslava Salazar with AFP
