Turkey's central bank chief is resigning amid a 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 resigned because of “a major reputation assassination campaign.”
The outgoing head of the central bank, 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 surprising change came about eight months after a shift in Turkey's economic program aimed at taming a years-long cost-of-living crisis that has been painful for many Turks. Annual inflation last month was about 65 percent.
In an apparent bid to reassure investors, senior officials said Ms. Erkan's departure did not signal a change in policy.
Turkish Finance Minister Mehmet Simsek described Ms Erkan's departure as a personal decision and said she would be replaced by “a respected macroeconomist with extraordinary depth of knowledge and expertise.”
He and Vice President Cevdet Yilmaz said Mr Erdogan continued to support the economic team and its policies.
From 2018 onwards, Mr Erdogan oversaw a policy of continuously cutting interest rates even as the value of the Turkish currency plummeted and inflation soared. That went against conventional economics, which calls for raising interest rates to combat inflation.
After winning re-election in May, Mr Erdogan signaled a shift in approach by appointing Ms Erkan and Mr Simsek, who moved Turkey back towards orthodox policies. The central bank has since raised interest rates repeatedly, last month reached 45 percent.
The new central bank chief, Mr. 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, his colleague said. official biography of the central bank. Since July he has been a member of the banking committee that sets interest rates.
Ms Erkan's appointment was initially welcomed because her background, including stints at Goldman Sachs and First Republic Bank in the United States, suggested she would pursue conventional monetary policy.
But she has been dogged by rumors since a Turkish newspaper reported that her father, who has no official role at the bank, had interfered in the bank's operations, an accusation the bank denied.
In a statement posted online late Friday, Ms. Erkan defended her record and said her approach was starting to pay off, but she resigned to protect her family and her young child.