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Turkey’s central bank governor Hafize Gaye Erkan, who oversaw a campaign of huge interest rate rises, has resigned just months into her tenure, blaming what she called weeks of smears against her in local media.
Erkan, who was appointed in June as the bank’s first female chief, will be replaced by deputy governor Fatih Karahan, according to Turkey’s official gazette. Karahan, a former Federal Reserve economist, will be President Recep Tayyip Erdoğan’s sixth central bank chief in five years.
“A major character assassination campaign has been organised against me recently,” Erkan said on Friday evening, adding that she had quit “in order to prevent my family and, moreover, my sinless child . . . from being further affected by this process”.
Erkan, a former Goldman Sachs banker, has been one of the central architects of a sweeping economic policy overhaul that began after Erdoğan’s re-election in May and has been widely applauded by foreign investors who had largely abandoned Turkey’s markets over the past decade.
The central bank under her stewardship has raised interest rates from 8.5 per cent in June to 45 per cent in a bid to vanquish an extended inflation crisis, reversing a long-standing policy of holding borrowing costs at ultra-low levels. Erdoğan, who once called high interest rates the “mother and father of all evil”, has appeared to back the increases.
Erkan has faced significant criticism in some newspapers in recent weeks over claims that her father had been given an unofficial role at the central bank and had sacked an employee. She strongly denied the accusations, calling them “unfounded” and “completely unacceptable”.
Erdoğan appeared to throw his support behind Erkan as recently as last week, when he said unnamed assailants were “conducting campaigns to disrupt the climate of confidence and stability that we have achieved with great difficulty in the economy with unreasonable rumours”.
Karahan’s elevation to central bank chief after his appointment as deputy governor in July 2023 will help assuage fears that the president will abruptly change course on economic policy, as he has done in the past.
“I know him as an . . . expert who is respected by the employees of the institution,” said Hakan Kara, a former Turkish central bank chief economist. One local banker added that Karahan is a “credible” choice to lead the bank, noting that he had earlier in his career worked as a New York Fed economist for nearly a decade.
Finance minister Mehmet Şimşek, a former Merrill Lynch bond strategist who has led the economic turnaround efforts since they began in June, said on Friday evening that the programme “continues without interruption and with determination”.
He added: “Our president has full support and confidence in our economic team and the programme we are implementing.”
Emre Peker, Europe director at risk advisory Eurasia Group, said he “would not expect any changes [in policy] through the local elections” set for late March.
Additional reporting by Funja Güler in Ankara
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