The Turkish central bank has a new boss. The previous deputy head, Fatih Karahan, has been appointed as the new head of the central bank, it was announced late on Friday evening in the Turkish official gazette. The 42-year-old former banker at the US Federal Reserve Bank replaces the previous boss Hafize Gaye Erkan, who had surprisingly announced her resignation a few hours earlier. Erkan had headed the central bank since last June and was the first woman to hold the post.
The 44-year-old had come under fire over allegations of nepotism. The trigger was a report in the daily newspaper critical of the government Sözcü, which quoted a central bank employee as saying that Erkan’s father had unlawfully interfered in personnel decisions. Erkan rejected the allegations. She wrote on the platform X, formerly Twitter, that she was resigning to protect her family and her “innocent child.”
During Erkan’s term in office, the Turkish central bank combated the country’s high inflation. The 44-year-old raised the key interest rate to 45.0 percent. Previously it was much lower at 8.5 percent. After Erkan’s resignation on Friday, Finance Minister Mehmet Şimşek announced that the previous economic policy would be continued. New central bank chief Fatih Karahan said on Sunday: “We will keep an eye on inflation expectations and price developments. We are ready to act if the inflation outlook worsens.”
Inflation in Turkey is still extremely high at around 65 percent. After rising to 85 percent in 2022, it fell temporarily, but recently rose again. One reason for the high inflation is the weak local currency, the lira, which makes imports into Turkey significantly more expensive.