Turkey’s fresh central bank leader: a turning point for the economy.

February 5, 2024
1 min read

Turkey has appointed a new central bank leader, Deputy Governor Fatih Karahan, following the resignation of Hafize Gaye Erkan after just eight months in the role. Erkan stepped down after allegations of nepotism emerged in local media, which she strongly rejected. Karahan’s appointment suggests that Turkey will maintain higher interest rates overseen by Finance Minister Mehmet Simsek. This marks a departure from President Recep Tayyip Erdogan’s previous unorthodox belief in keeping interest rates low to fight inflation. The central bank shakeup is significant for Turkey’s battered economy, as previous changes in leadership saw efforts to control inflation through interest rate hikes being reversed. However, the recent series of rate hikes since Erdogan’s reelection in May has helped restore confidence among foreign investors. Inflation, however, remains high. Karahan, who has experience working in the US, completed his education in economics at the University of Pennsylvania and worked at the Federal Reserve Bank of New York. Following Karahan’s appointment, Simsek affirmed the government’s commitment to supporting the disinflation process through fiscal discipline. Turkey’s economy is facing local elections in March, which could potentially impact economic policies.

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