New Central Bank Governor Appointed, Economic Policy to Continue: Top Officials
In a recent development, Hafize Gaye Erkan, the country’s first female Central Bank governor, announced her resignation after less than a year in the job. However, top government officials have assured the public that the economic program will continue seamlessly with the appointment of a new governor.
Finance Minister Mehmet Şimşek expressed his gratitude for Erkan’s service and emphasized that her decision to resign was entirely personal. He also reassured the public of President Recep Tayyip Erdoğan’s unwavering support and confidence in the economic team and the program. The new governor, Fatih Karahan, a former economist at the Federal Reserve Bank of New York, was appointed to replace Erkan.
Karahan, who has been acting as deputy Central Bank governor since July last year, brings a wealth of experience to his new role. He started his career at the Federal Reserve Bank of New York in 2012 and has also lectured at prestigious institutions such as Columbia University and New York University. In 2022, he joined Amazon as a senior economist and was later appointed as the principal economist of the company.
Despite Erkan’s resignation, the government remains committed to implementing their disinflation program and taking necessary steps to achieve price stability. Vice President Cevdet Yılmaz emphasized that the medium-term program, which has the president’s strong support, will continue to be implemented decisively.
Erkan, in her social media statement announcing her resignation, mentioned a “major reputation assassination campaign” against her. She stated that she stepped down to protect her family, particularly her young child, from further harm.
Karahan is expected to make his first public appearance on February 8th when he presents the Central Bank’s quarterly inflation report. This report will include the bank’s inflation projections and Karahan will have the opportunity to address questions from reporters and analysts during the presentation.
Financial institutions have commented on the appointment of Karahan, stating that it does not signal a change in policy direction or a political preference for lower interest rates. Morgan Stanley noted that they expect the Central Bank to continue prioritizing inflation with a conventional monetary policy framework. They also mentioned that Karahan’s policy messages will be closely watched during the inflation report press conference.
JP Morgan, another investment bank, sees the new Central Bank governor as positive for disinflation and the lira. They anticipate that Karahan will deliver hawkish forward guidance during the inflation report press briefing, aligning with their belief that the reshaped Monetary Policy Committee is likely more hawkish.
Overall, despite the change in leadership, the government’s commitment to economic stability and the implementation of their economic program remains steadfast. With Karahan’s appointment, there is optimism for continued progress in achieving disinflation and maintaining price stability.