Turkey's official newspaper reported yesterday, Thursday, that President Recep Tayyip Erdogan appointed three deputies to the Central Bank Governor, Hafiza Gaye Erkan, just hours after the bank raised its inflation forecasts for the end of 2023 and pledged to continue gradually tightening monetary policy. According to the published decision, Osman Cevdet Akçay, Fathi Karahan, and Khadija Karahan were appointed as deputies to the governor. Fathi Karahan's profile shows that he held positions at the Federal Reserve Bank of New York for nearly a decade before recently moving to Amazon as a senior economist. Akçay is an economist who worked at Yapı Kredi Bank, and Khadija Karahan is a prominent academic and economic advisor to the president.
This move comes after the central bank, under the leadership of Hafiza Gaye Erkan, reversed its course and tightened monetary policy by 900 basis points in the past two months following years of interest rate cuts and rising living costs. Economic experts expect the Turkish central bank to raise interest rates to 25 percent by the end of the year. They warned that Erdogan's influence over the central bank limits the extent to which tightening policies can reach. Tim Ash from BlueBay Asset Management stated that the appointment of the three represents a "180-degree shift" from Erdogan, as they replaced economists who were pursuing less conventional policies.
