Turkey Appoints First Woman Central Bank Governor

Turkish President Recep Tayyip Erdogan chose seasoned banker Hafize Gaye Erkan as the new Central Bank governor on Friday, succeeding Sahap Kavcioglu.

This move confirms that Erdogan's new government intends to adopt a more traditional approach to monetary management.

Erkan, 41, will become the first female head of the Turkish Central Bank. She is a former financial executive in the United States.

Erkan received her PhD in operations research and finance engineering from Princeton University after completing her undergraduate studies at Istanbul's Bogazici University.

She has held a number of high positions, notably 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. 

Markets are anticipating that her nomination means Turkey would normalise its economic policies and move away from Erdogan's strategy of low interest rates in the face of rising inflation.

Granted that her predecessor mostly followed directions from Erdogan, Erkan's performance at the central bank will rely on how much independence she is granted.

Prior to Erkan's appointment as governor in March 2021, her predecessor, Kavcioglu, had the central bank's monetary policy committee reduce its policy interest rate from 19% to 8.50%.

Last week Erdogan introduced his new cabinet and appointed new finance, foreign and military ministers after securing victory in a competitive runoff election.

In a widely anticipated decision, Erdogan appointed the internationally acclaimed ex-banker Mehmet Simsek as treasury and finance minister.

The financial markets have a lot of regard for Simsek, a conventional economics proponent who was finance minister and deputy prime minister from 2009 to 2018.

His hiring is intended at tackling Turkey's cost-of-living crisis and might set the way for interest rate hikes in the following months.

After being appointed on Sunday, Simsek signaled the return to conventional economics by saying the country needs to return to "rational ground."

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

He added that achieving macro-financial stability will be a priority.