Former Wall Street exec named head of Turkey central bank

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Istanbul: Turkish President Recep Tayyip Erdogan appointed former Wall Street executive Hafize Gaye Erkan as central bank governor on Friday, signalling a possible shift from his unconventional policies to fight soaring inflation.
Erkan — a former chief executive of US real estate finance firm Greystone, co-CEO of First Republic Bank and managing director at Goldman Sachs — will be the first woman to head the central bank.
She takes over from Sahap Kavcioglu, who lowered rates even though central banks worldwide have done the opposite to fight inflation. Her appointment was published in the official gazette on Friday.
Under Kavcioglu’s watch, the bank’s policy rate was decreased to 8.5 percent. It had been at 19 percent in 2021.
The central bank “replaces its puppet banker,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note.
She suggested that the new governor would likely return the bank toward a more conventional monetary policy that would require rate hikes.
The analyst also expects diminishing foreign exchange market interventions “which will first lead to a further lira depreciation to catch up a year-and-a-half coma — an expensive coma.”
The bank is due to make a rate decision on June 22.
Turkey’s inflation rate dropped below 40 percent in May for the first time in 16 months. Independent economists believe it is much higher, above 100 percent.
Erdogan, who was re-elected to a third term in office last month, already signalled a shift on Saturday when he unveiled a new cabinet with Mehmet Simsek, a former Merrill Lynch economist, as finance minister.
Simsek — who worked as finance minister and deputy prime minister in the past ruling AKP governments — is known to oppose Erdogan’s unconventional policies of lowering interest rates in order to fight inflation.

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