ISTANBUL, TURKEY – Hafize Gaye Erkan, the central bank governor of Turkey, recently announced her resignation just a few months into her term. The reason she gave for her abrupt departure was the relentless smear campaign against her in the local media. Erkan, who was appointed as the bank’s first female governor in June, attributed her decision to personal reasons. She also expressed concern for her family and particularly her child, who she feared would be affected by the ongoing negative publicity.
Erkan has been instrumental in implementing a significant economic policy overhaul since Turkish President Recep Tayyip Erdoğan’s re-election in May. These changes have been well received by foreign investors who had previously abandoned Turkey’s markets over the past decade. Her leadership has led to a drastic increase in interest rates – from 8.5 per cent in June to 45 per cent – in an effort to combat the country’s long-standing inflation crisis.
Despite Erdoğan’s past resistance to high interest rates, he appeared to support Erkan’s measures. However, investors remained wary of sudden policy shifts, given Erdoğan’s history of firing central bank governors for raising interest rates. The future of Turkey’s economic policy and the selection of a new governor now hang in the balance.
The resignation of Erkan has led to speculation about her potential successors, with deputy central bank governors Osman Cevdet Akçay and Fatih Karahan emerging as front-runners. There is also anticipation for the upcoming local elections and how they may impact the country’s monetary policies.
Erkan’s departure underlines the challenges of instituting drastic economic reforms and the delicate balance between stability and the demands of global investors. As Turkey navigates through this transition, the focus is on maintaining confidence in the economy and ensuring the continuity of key policies.