09 June 2023

Erdogan appoints former US executive to head Turkey’s central bank

09 June 2023

Turkish president Recep Tayyip Erdogan has appointed a former US-based executive to head Turkey’s central bank in another sign that his administration might pursue more conventional economic policies.

Mr Erdogan named Hafize Gaye Erkan, a former co-chief executive officer of the First Republic Bank, as governor.

The Princeton-educated 41-year-old becomes the Turkish central bank’s first female governor.

Mr Erdogan won a third presidential term in elections last month as the country grapples with a cost-of-living crisis fuelled by inflation that peaked at a staggering 85% in October.

Critics blame the turmoil on Mr Erdogan’s policy of lowering interest rates to promote growth. The approach runs contrary to conventional economic thinking that calls for rate increases to combat inflation.

On Saturday, Mr Erdogan reappointed Mehmet Simsek, a former banker, finance minister and deputy prime minister, to the post of finance and treasury ministry. He returned to the Cabinet after a five-year break from politics.

Mr Simsek and Ms Erkan’s appointments are seen as an indication that Mr Erdogan may abandon policies that many economists have branded as “unorthodox”.

Ms Erkan was a managing director at the Goldman Sachs investment banking company and worked at the now-failed San Francisco-based First Republic Bank, holding the post of co-CEO for six months in 2021.

She replaces Sahap Kavcioglu who oversaw a series of rate cuts since 2021.

Mr Kavcioglu has been moved to head the country’s banking watchdog, BBDK.

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