Turkey’s fresh central bank chief vows inflation-fighting, raising interest rates.

February 5, 2024
1 min read

TLDR:

– Turkey has appointed Fatih Karahan as the new leader of the central bank, following the resignation of former leader Hafize Gaye Erkan.
– Karahan aims to curb inflation through interest rate hikes.

Turkey has appointed Fatih Karahan as the new leader of the central bank, following the resignation of former leader Hafize Gaye Erkan. Erkan, the first woman to lead Turkey’s central bank, stepped down after just eight months in the job, facing allegations of nepotism and media scrutiny. Karahan, who completed his master’s degree and doctorate in economics at the University of Pennsylvania, aims to curb inflation through interest rate hikes. This comes as Turkey has seen its fifth central bank leader depart in as many years.

Erkan’s resignation comes after weeks of media stories about her father’s undue influence in the central bank’s Istanbul office. While Erkan received some support from President Recep Tayyip Erdogan, who spoke out against “unreasonable rumors” undermining Turkey’s economic progress, critics continued to question her leadership. In particular, they highlighted a magazine interview in which she said her family had moved in with her parents due to high prices and affordability issues in Istanbul.

Previous changes in central bank leadership have seen Erdogan rollback efforts to bring inflation under control through interest rate hikes. However, Erkan’s replacement, Fatih Karahan, indicated that Turkey will maintain higher interest rates overseen by Finance Minister Mehmet Simsek. Interest rates have risen significantly under Erdogan’s leadership, but despite these hikes, inflation remains high in Turkey.

Like Erkan and Simsek, Karahan has experience working in the United States. He completed his master’s degree and doctorate in economics at the University of Pennsylvania and worked at the Federal Reserve Bank of New York for ten years before becoming chief economist at Amazon. Turkey’s economy now faces the challenge of local elections in March, and the outcome could potentially impact the country’s economic policies moving forward.

In conclusion, the appointment of Fatih Karahan as the new leader of Turkey’s central bank comes after the resignation of Hafize Gaye Erkan. Karahan aims to curb inflation through interest rate hikes, but Turkey’s economy still faces challengesĀ as it continues to deal with high inflation rates.

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