Shake up at Türkiye's Central Bank as latest governor quits

Türkiye's troubled economy has been thrown into further uncertainty with the resignation of its latest central bank chief, just months after she took up the role.

Former Goldman Sachs executive Hafize Gaye Erkan has said she is standing down after what she has called "unfounded (and) ...completely unacceptable" claims against her family, citing the need to protect her young child.

Erkan, a dual Turkish-U.S. national, was hired by President Recep Tayyip Erdogan after May's election to help tackle a currency and cost-of-living crisis that saw the official inflation figure peak at 85 percent in October 2022.

Rates rises

As the first woman to take up the position as central bank governor, Erkan has presided over a series of interest rate rises that have taken the cost of borrowing from 8.5 percent to 45 percent, in a bid to cool prices.

Her appointment, along with that of former Merrill Lynch economist Mehmet Simsek as finance minister, had been seen as a return to orthodox economic management in Türkiye after years of rate cuts aimed at boosting export based growth. Four previous central bank governors departed after clashing with Erdogan, who has described interest payments as "un-Islamic."

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Her tenure had been met with approval by international investors. Last month the bond fund giant Pimco said it had returned to the Turkish market, adding that it believed reforms were putting the republic on track to regain an investment grade credit rating.

"Determination"

Erkan's replacement is Deputy Governor Fatih Karahan, former Federal Reserve Bank of New York and Amazon economist.

On X, finance minister Mehmet Simsek called Erkan's decision to quit "entirely personal." He described the new bank chief as "a well respected macroeconomist", adding that with Erdogan's support "our economic program continues seamlessly and with a strong determination."

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