July 21, 2024

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Turkey central bank chief quits, citing need to protect her family

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Turkish Central Bank Governor Hafize Gaye Erkan answers questions during a news conference for the Inflation Report 2023-III in Ankara, Turkey on July 27, 2023.

Anadolu Agency | Anadolu Agency | Getty Images

Turkey’s central bank governor Hafize Gaye Erkan resigned on Friday, citing a need to protect her family amid a “reputation assassination”, and she was swiftly replaced by a deputy who is expected to carry on her tight policy stance.

President Tayyip Erdogan – who hired Erkan eight months ago to pivot away from years of inflation-fueling low interest rates to a more orthodox policy – named Deputy Governor Fatih Karahan to take the reins, the Official Gazette said early on Saturday, two hours after the surprise resignation.

The personnel changes at the helm of Turkey’s economy came as Erkan’s aggressive interest rate hikes had begun cooling inflation expectations after a years-long cost-of-living crisis for Turks.

The first woman to lead the central bank, Erkan was its fifth governor in as many years. Erdogan fired the last four, eroding the institution’s independence and sowing concerns about dysfunction.

But late on Friday, cabinet leaders quickly said that the economic programme will carry on after Erkan’s departure.

Turkey hikes interest rate again to 45% after inflation nears 65%

Karahan, a former Federal Reserve Bank of New York economist, was appointed deputy in July and is seen as a capable successor who played a big role in engineering the monetary tightening.

Erkan, a former U.S. bank executive, began raising rates when she was appointed in June, launching a 180-degree pivot away from years of low rates under Erdogan that had sent inflation soaring and foreign investors fleeing.

Since then the central bank had hiked its key rate to 45% from 8.5%. Last week, after another 250 basis-point rise, it said it had tightened enough to achieve disinflation, signalling a halt.

Erkan said that “our economic programme has started to bear fruit”, citing rising foreign…

2024-02-03 04:31:00

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