Sat. Mar 2nd, 2024

President Recep Tayyip Erdogan has named Fatih Karahan, the Deputy Governor of the central bank, as its new head following the resignation of Hafize Gaye Erkan. The announcement was made through the Official Gazette on Saturday, just hours after Erkan cited the need to protect her family amid a media scandal as a reason for stepping down.

Erkan, the first woman to lead the bank, initiated a significant shift in economic policy when she raised interest rates in June last year, steering away from years of low rates under Erdogan. The decision led to a series of rate hikes, taking the key rate from 8.5 percent to 45 percent. Last week, the central bank declared that it had tightened enough to achieve disinflation, signaling a pause.

In her resignation statement, Erkan highlighted the success of the economic program, citing rising foreign reserves and the anticipation of cooling inflation around midyear. However, she pointed to a recent reputation assassination campaign against her as a factor influencing her decision to resign, seeking protection for her family, including her young child.

The opposition newspaper Sozcu had published an article last month, accusing Erkan’s father of wrongfully dismissing a central bank employee. Erkan labeled the story as “unfounded” and unacceptable, vowing legal action. Erdogan expressed concern about efforts to spread rumors undermining economic progress, seemingly endorsing Erkan.

Finance Minister Mehmet Simsek emphasized Erkan’s resignation as a personal decision, affirming the continuity of the economic program under the leadership of Karahan. The newly appointed chief, a former senior economist at Amazon and a former Federal Reserve Bank of New York economist, is expected to uphold the policies that have been successful in cooling inflation expectations.

Inflation, reaching nearly 65 percent last month, is anticipated to start declining around June, offering relief to the Turkish populace. Foreign investors, including major players like Pimco and Vanguard, demonstrated confidence in Erkan and Simsek’s program by investing in Turkish assets last year.

Erdogan and other key leaders reiterated their support for the economic team and program, aiming to sustain the positive momentum achieved under Erkan’s tenure. The appointment of Karahan is seen as a strategic move to maintain stability and continue the successful trajectory set by his predecessor.

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