Following the resignation of Hafize Gaye Erkan due to a media scandal, President Recep Tayyip Erdogan has appointed the central bank’s Deputy Governor Fatih Karahan as the new chief.
The former senior economist at the US online retail giant Amazon’s appointment was announced in the Official Gazette early on Saturday, shortly after Erkan cited the need to protect her family as one of the reasons for stepping down.
Cabinet leaders have affirmed that the economic program, which had already begun to lower inflation expectations after a prolonged period of cost-of-living crisis, will continue under Karahan, who is credited with playing a significant role in orchestrating the monetary tightening.
Last year, Erkan, the first woman to lead the bank, began increasing interest rates, marking a complete shift from years of low rates under Erdogan, which had led to soaring inflation and drove foreign investors away.
Since then, the central bank has raised its key rate to 45 percent from 8.5 percent. Following another 250-basis-point increase last week, it indicated that it had tightened enough to achieve disinflation, signaling a pause.
In her resignation statement, Erkan pointed to the positive developments in the economic program, such as rising foreign reserves and the anticipated cooling of inflation around midyear, as evidence of its success.
However, she also mentioned a recent “reputation assassination campaign” against her, stating that she requested to be relieved from duty in order to protect her family and young child from further impact.
Last month, the opposition newspaper Sozcu published an article about a central bank employee who claimed she was wrongfully dismissed by Erkan’s father. In response, Erkan labeled the news story as “unfounded” and expressed her intention to pursue legal action against those responsible.
President Erdogan decried efforts to spread “rumours” aimed at undermining economic progress, in an apparent show of support for Erkan, who was the bank’s fifth governor in as many years.
Finance Minister Mehmet Simsek stated that Erkan’s resignation was her personal decision and reassured that the economic program would continue without interruption.
Karahan, who holds a doctorate in economics from the University of Pennsylvania and previously worked as an economist at the Federal Reserve Bank of New York, has received backing from Erdogan, as confirmed by Finance Minister Simsek and Vice President Cevdet Yilmaz.
Inflation reached nearly 65 percent last month and is predicted to start decreasing around June, offering some relief to Turks who have faced unaffordable rent and basic necessities for years.
Foreign investors, including leading entities like Pimco and Vanguard, began investing in Turkish assets late last year, signaling confidence in Erkan and Simsek’s program.
