© Reuters. Turkish Central Bank Governor Hafize Gaye Erkan is pictured in Ankara, Turkey July 6, 2023. Turkish Central Bank/Handout via REUTERS/File Photo
ISTANBUL (Reuters) – Turkey’s central bank governor Hafize Gaye Erkan resigned on Friday, citing a need to protect her family amid a “reputation assassination”, raising questions around the aggressive policy tightening she had championed in her eight months in the post.
Erkan, the first woman to lead the central bank, is the fifth governor to leave the post in as many years, after President Tayyip Erdogan fired the last four, eroding its independence.
Cabinet leaders quickly said that the economic programme will carry on after her departure.
She was appointed by Erdogan in June to execute a 180-degree pivot away from years of his unorthodox low-rates policies that had sent inflation soaring and foreign investors fleeing.
Since June the central bank had hiked its key rate to 45% from 8.5%. Last week, after another 250 basis-point hike, it said it had tightened enough to achieve disinflation, signalling a halt.
Erkan, a former U.S. bank executive, said that “our economic programme has started to bear fruit”, citing rising foreign reserves and expectations that inflation will begin cooling around mid-year “as proof of this success”.
“Despite all these positive developments, as is known to the public, a major reputation assassination campaign has recently been organised against me,” she added on social media platform X.
“In order to prevent my family and my innocent child, who is not even one and a half years old, from being further affected by this, I have asked our President to pardon me from my duty.”
Finance Minister Mehmet Simsek said Erkan’s resignation was her personal decision and the economic programme will carry on uninterrupted. Turkish Vice President Cevdet Yilmaz also echoed the endorsement of the current policy.
It was unclear who Erdogan would appoint to replace her. He named three deputy governors in July who analysts see as capable successors. The president’s office and the central bank did not immediately comment on the matter.
Last month, opposition newspaper Sozcu published an article about a central bank employee who said she was wrongfully dismissed from the bank by Erkan’s father.
In response at the time, Erkan said that an “unfounded” news story targeting her, her family and the bank was “unacceptable” and vowed to exercise her legal rights against those responsible.
Inflation neared 65% last month and is expected to begin dipping around June. Foreign investors, including some of the world’s biggest money managers, began buying Turkish local debt late last year in a signal of confidence in the programme.
