In a surprising turn of events, Turkey’s central bank governor, Hafize Gaye Erkan, announced her resignation on Friday, emphasizing the need to protect her family amidst what she described as a “reputation assassination.” Erkan, who became the first woman to lead the central bank, had championed aggressive policy tightening during her eight months in the position.
This departure marks the fifth change in leadership in as many years, as the last four governors were dismissed by President Tayyip Erdogan, raising concerns about the bank’s independence.
Appointed by Erdogan in June, Erkan was tasked with steering away from years of unorthodox low-rate policies, which had led to soaring inflation and a decline in foreign investor confidence. Under her leadership, the central bank raised its key rate significantly, from 8.5% to 45%, signaling a departure from the previous approach.
Despite facing criticism for the aggressive policies, Erkan highlighted positive developments, such as increasing foreign reserves and the expectation of inflation cooling around mid-year, as signs of success in the economic program.
However, in a social media post, Erkan disclosed a recent reputation assassination campaign against her and expressed concern for her family, including her young child. As a result, she requested President Erdogan to release her from her duties.
Finance Minister Mehmet Simsek affirmed that Erkan’s resignation was a personal decision, ensuring the uninterrupted continuation of the economic program. Vice President Cevdet Yilmaz also echoed support for the current policy.
The replacement for Erkan remains uncertain, with three deputy governors named by Erdogan in July considered potential successors. The president’s office and the central bank have not yet commented on the matter.
The resignation follows a recent article in an opposition newspaper alleging wrongful dismissal of a central bank employee by Erkan’s father. Erkan had previously dismissed the story as “unfounded” and vowed to exercise her legal rights against those responsible.
With inflation reaching nearly 65% last month and expected to decline around June, foreign investors, including major money managers, had shown confidence in the program by investing in Turkish local debt late last year. The aftermath of Erkan’s departure leaves questions about the future direction of Turkey’s economic policies.