Turkey’s first female central bank governor signals shift to conventional policies

Turkey’s President Recep Tayyip Erdogan has appointed Hafize Gaye Erkan, a former US-based bank executive, as the first female governor of the country’s central bank. The move signals a potential shift towards more conventional economic policies under Erdogan’s administration. Erkan, 41 years old, is a former co-chief executive officer of the First Republic Bank and holds a Princeton education.

Erdogan secured a third presidential term in recent elections, amidst a cost-of-living crisis exacerbated by soaring inflation rates. Critics attribute the economic turmoil to Erdogan’s policy of reducing interest rates to stimulate growth, which contradicts traditional economic principles advocating for rate increases to curb inflation.

Erkan previously held a managing director position at Goldman Sachs and served as co-CEO of the now-defunct First Republic Bank in San Francisco for six months in 2021. She succeeds Sahap Kavcioglu, who has been appointed to lead the Banking Regulation and Supervision Agency (BDDK), Turkey’s banking watchdog.

Last week, Erdogan reappointed UK-educated Mehmet Simsek, a former banker, finance minister, and deputy prime minister, to lead the finance and treasury ministry. The appointments of Simsek and Erkan are viewed by experts as indications that Erdogan may abandon “unorthodox” economic policies.

Liam Peach, senior emerging markets economist at Capital Economics, commented on the recent appointments, stating, “Bringing inflation down sustainably will require a major policy tightening and the appointment of a more credible cabinet over the weekend provides hope that policymaking may shift in a more sustainable direction.”