Erdogan Names Erkan to Head Türkiye Central Bank

Hafize Gaye Erkan. Photo: Bloomberg
Hafize Gaye Erkan. Photo: Bloomberg
TT
20

Erdogan Names Erkan to Head Türkiye Central Bank

Hafize Gaye Erkan. Photo: Bloomberg
Hafize Gaye Erkan. Photo: Bloomberg

President Tayyip Erdogan on Friday appointed Hafize Gaye Erkan, a finance executive in the United States, to head Türkiye's central bank as it prepares to reverse course and tighten policy after years of rate cuts and a simmering cost-of-living crisis.

Erkan, former co-CEO at First Republic Bank and managing director at Goldman Sachs, takes the reins after Erdogan's re-election on May 28 and just under a week after he signaled a pivot away from unorthodoxy with a new cabinet.

The fifth central bank chief in four years, 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% last year.

The announcement of Erkan's appointment in the Official Gazette was accompanied by a decision to appoint Kavcioglu as head of the country's BDDK banking watchdog.

Erkan's leanings are unclear given she has no formal monetary policy experience in her career spanning Wall Street and US corporate boardrooms. She has a Ph.D. from Princeton University in financial engineering.

She was at First Republic from 2014-2021, according to her LinkedIn profile. This year, it became the largest US bank to fail since 2008 after it was seized by regulators and sold to JPMorgan.

Türkiye 's central bank has had its independence all but stamped out in recent years by Erdogan. A self-proclaimed "enemy" of interest rates, he pressed it to deliver stimulus and was quick to replace governors.

The policy rate was slashed to 8.5% from 19% in 2021, leaving real rates deeply negative and the lira largely managed by dozens of regulations covering credit and foreign exchange. Yet after Erdogan survived his toughest political test in the May 28 runoff vote, he on Saturday named Mehmet Simsek, a well-respected and orthodox former finance minister, as minister in charge of the economy.

Amid record low foreign reserves of -$5.7 billion, the lira has hit all-time lows this week, plunging 7.2% on Wednesday, and traded at 23.5010 against the dollar after Erkan's appointment.

According to Reuters, analysts said the return of Simsek and the appointment of Erkan set the stage for rate hikes, which could reattract foreign investors after an exodus in recent years.

The apparent U-turn on the economy comes as many analysts anticipate turmoil given depleted foreign reserves, unchecked inflation and wide current account deficits.

The economy's prospects depend on how much independence Erdogan grants Erkan and Simsek, analysts said. In the past, he has embraced orthodoxy, only to quickly double back.

The last central bank governor to raise rates, Naci Agbal, was fired in 2021 after less than five months on the job.

"It is unclear for how long Erdogan may tolerate a more pragmatic stance on the economic front, given the priority he assigns to the March 2024 local elections," said Wolfango Piccoli of Teneo. The ruling AK Party aims to recapture big cities from opposition control in those elections.

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.



Russia Urges US, UK to Restrain Ukraine after Attacks on Bombers

Russia's Deputy Foreign Minister Sergei Ryabkov attends the BRICS Meeting of Ministers of Foreign Affairs in Rio de Janeiro, Brazil, April 28, 2025. Mauro Pimentel/Pool via REUTERS/File Photo
Russia's Deputy Foreign Minister Sergei Ryabkov attends the BRICS Meeting of Ministers of Foreign Affairs in Rio de Janeiro, Brazil, April 28, 2025. Mauro Pimentel/Pool via REUTERS/File Photo
TT
20

Russia Urges US, UK to Restrain Ukraine after Attacks on Bombers

Russia's Deputy Foreign Minister Sergei Ryabkov attends the BRICS Meeting of Ministers of Foreign Affairs in Rio de Janeiro, Brazil, April 28, 2025. Mauro Pimentel/Pool via REUTERS/File Photo
Russia's Deputy Foreign Minister Sergei Ryabkov attends the BRICS Meeting of Ministers of Foreign Affairs in Rio de Janeiro, Brazil, April 28, 2025. Mauro Pimentel/Pool via REUTERS/File Photo

Moscow said on Wednesday that military options were "on the table" for its response to Ukrainian attacks deep inside Russia and accused the West of being involved in them, Reuters reported.

Russia also urged the United States and Britain to restrain Kyiv after the attacks, which Ukrainian officials have lauded as showing Kyiv can still fight back after more than three years of war.

British and US officials have said they had no prior knowledge of Ukraine's attacks on Russian nuclear-capable long-range bombers at military bases over the weekend.

Ukraine also tried to blow up a rail and road link with Crimea on Tuesday, and Russia says Kyiv blew up a highway bridge over a passenger train late on Saturday.

US President Donald Trump's Ukraine envoy said the risk of escalation from the war "going way up" after the attacks on the nuclear-capable bombers. A week earlier, Trump rebuked Russian President Vladimir Putin over a fierce aerial attack on Ukraine.

"We urge London and Washington to react in such a way as to stop further escalation," Russian Deputy Foreign Minister Sergei Ryabkov, who oversees relations with the US and arms control, was quoted as saying by Interfax news agency.

"All options are on the table," Ryabkov said, when asked what Russia's response to Ukraine's attacks would be. "This is a question for our military."

Russia and the US together hold about 88% of all nuclear weapons.

Asked whether Russia thought the West was involved in the recent attacks, Foreign Ministry spokeswoman Maria Zakharova said the West supplied weapons, gave target coordinates, refused to condemn such attacks and actively incited them.

"These are several areas that prove the fact of the involvement, both direct and indirect, and the guilt of the West for the terrorist attacks that are taking place against civilians and civilian infrastructure facilities by the Kyiv regime," Zakharova said.

Kyiv has not commented on the bridge attacks. Each side has accused the other of carrying out acts of terrorism during the conflict and each blames the other for a lack of progress at peace talks.

Trump was not informed in advance of Ukraine's drone attacks on Russia, White House spokeswoman Karoline Leavitt said on Tuesday. A British government official said the government was not informed ahead of time.