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Turkey names first woman central bank governor in major economic overhaul

Erdogan appoints Hafize Gaye Erkan in sign Ankara may be returning to more orthodox financial policies
Hafize Gaye Erkan poses for a photo after receiving an award at the ceremony of the "40 Most Influential Young People Under 40" awards in New York in 2017 (Anadolu Agency)
Hafize Gaye Erkan poses for a photo after receiving an award at the ceremony of the "40 Most Influential Young People Under 40" awards in New York in 2017 (Anadolu Agency)

Turkish President Recep Tayyip Erdogan named experienced banker Hafize Gaye Erkan as the new Central Bank governor on Friday, replacing Sahap Kavcioglu.

The move, which had been widely rumoured, is another  signal that Erdogan's new government aims to move towards a more conventional monetary policy.

Erkan, 41, a former banking executive in the US, is to become the Turkish central bank’s first female chief.

A graduate of Istanbul's Bogazici University, Erkan earned her doctorate in operations research and financial engineering at Princeton University.

She has held a number of senior positions, including at Goldman Sachs and the San Francisco-based First Republic Bank, which collapsed in May more than a year after Erkan stepped down as co-chief executive officer. 

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Her appointment is expected to indicate to markets that the country’s economic policies will normalise and move away from Erdogan's policy of low interest rates in the face of rising inflation.

Erkan’s success will depend on how much autonomy she will be able to carve out at the central bank given that her predecessor largely followed guidance from Erdogan.

After Kavcioglu, Erkan's predecessor, was named to the central bank helm in March 2021, the bank's monetary policy committee gradually lowered its policy interest rate from 19 percent to 8.5 percent.

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Last week Erdogan unveiled his new cabinet and announced new finance, foreign and defence ministers after clinching victory in a hotly contested runoff election.

In a highly anticipated appointment, Erdogan appointed the internationally respected ex-banker Mehmet Simsek as treasury and finance minister.

Simsek, an advocate of conventional economics, is highly regarded by the financial markets after serving as finance minister and deputy prime minister between 2009 and 2018.

His appointment is aimed at tackling Turkey's cost-of-living crisis and could set the stage for interest rate hikes in the coming months.

Simsek signalled the return to orthodox economics after his appointment on Sunday, saying the country had no choice but to come back to "rational ground".

"Transparency, consistency, predictability and compliance with international norms will be our basic principles in achieving this goal," Simsek said.

Achieving macro-financial stability will be a priority, he added. 

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