Ankara: President Tayyip Erdogan on Friday appointed Hafize Gaye Erkan, a finance executive in the United States, to head Turkey’s central bank, which is widely expected to reverse course and tighten policy after years of rate cuts.
Erkan, former co-CEO at First Republic Bank and managing director at Goldman Sachs, takes the reins after Erdogan’s re-election.
The central bank’s first female governor, Erkan is also its fifth chief in four years, underlining the challenge she may face delivering a lasting policy turnaround.
The 43-year-old replaces Sahap Kavcioglu, who spearheaded Erdogan’s rate-cutting drive that set off a historic currency crash in 2021 and sent inflation to a 24-year peak above 85 per cent last year.
Erkan’s appointment in the Official Gazette was accompanied by a decision to appoint Kavcioglu as head of the BDDK banking regulator.
Erkan has a Ph.D. from Princeton University in financial engineering.
She was at First Republic from 2014-2021, according to her LinkedIn profile.
Analysts now expect Turkey’s central bank to hike interest rates to between 20 per cent and 25 per cent from 8.5 per cent as soon as this month.
Shift in policy
The central bank slashed its policy rate to 8.5 per cent from 19 per cent in 2021, leaving real rates deeply negative and the lira largely managed by dozens of regulations covering credit and foreign exchange.
Amid record low foreign reserves of -$5.7 billion, the lira has hit all-time lows this week, plunging 7.2 per cent on Wednesday alone, and traded at 23.5 against the dollar on Friday after Erkan’s appointment.
Analysts said the return of Simsek and the appointment of Erkan set the stage for rate hikes, which could lure back foreign investors after an exodus in recent years.
Erkan is on Marsh McLennan’s board and was named CEO at Greystone, a real estate finance and investment firm, last year.
During her career in New York City, she gained a reputation as “tough, smart, and effective,” said Kathryn Wylde, CEO of the Partnership for New York City nonprofit, where Erkan once served as a director.
“She is certainly not someone who can be pushed around, but she also can disagree without being disagreeable,” Wylde said.