by Turkish President Recep Tayyip Erdogan named a new central bank governor early Saturday, hours after the abrupt resignation of his previous appointee, who he said was stepping down because of “a major campaign of reputation assassination.”
The central bank’s outgoing head, Hafize Gaye Erkan, was the fifth in five years and the first woman to hold the position. The bank’s deputy governor, Fatih Karahan, was quickly promoted to take her place.
The surprise change came about eight months after a change in Turkey’s economic program aimed at controlling a years-long cost-of-living crisis that has been painful for many Turks. Annual inflation through last month was about 65 percent.
In an apparent effort to reassure investors, senior officials said Erkan’s departure did not signal a change in policy.
Turkish Finance Minister Mehmet Simsek described Erkan’s departure as a personal decision and said she would be replaced by “a highly respected macroeconomist with extraordinary knowledge and experience.”
He and Vice President Cevdet Yilmaz said Erdogan continued to support the economic team and its policies.
Starting in 2018, Erdogan oversaw a policy of continually lowering interest rates, even as the value of the Turkish currency plummeted and inflation soared. This goes against conventional economics, which calls for raising interest rates to curb inflation.
After winning reelection in May, Erdogan signaled a shift in approach by appointing Erkan and Simsek, who turned Turkey back toward orthodox policies. Since then, the central bank has repeatedly raised interest rates, which last month reached 45 percent.
The new central bank chief, Karahan, has 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 central bank official biography. He has been part of the banking committee that sets interest rates since July.
Erkan’s appointment was initially welcomed because his experience, which included stints at Goldman Sachs and First Republic Bank in the United States, suggested he would pursue conventional monetary policies.
But rumors had dogged her since a Turkish newspaper reported that her father, who plays no official role at the bank, had intervened in its operations, an accusation the bank denied.
In a declaration In an online post on Friday evening, Ms Erkan defended her record, saying her approach had begun to bear fruit, but that she would resign to protect her family and her baby.
