Turkey Central Bank Has a New Boss

Turkey’s President Recep Tayyip Erdogan has appointed a former Wall Street banker Hafize Gaye Erkan as the country’s new central bank governor — another move that could potentially mark a policy pivot away from economic unorthodoxy.

Erkan, Turkey’s first female central bank chief, was a former managing director at Goldman Sachs and co-CEO at First Republic Bank. She is also Turkey’s fifth central bank governor in four years, CNBC said Friday.

Her appointment, alongside new Economy Minister Mehmet Simsek’s, could be a sign that Turkey’s monetary policy will normalize following years of ultra-low borrowing costs and soaring inflation, analysts say.

“Given her training at Princeton and her top-level experience in the US banking sector, I assume that the new governor will return to orthodox policies,” Selva Demiralp, a professor of economics at Koç University in Istanbul, told CNBC in an e-mail.

The caveat would lie in how much autonomy the central bank could exercise, and to what extent —something that Demiralp says investors will have to wait and see. That verdict could come as soon as two weeks when the central bank convenes for an interest rate decision meeting.

Demiralp expects a rate hike in the next central bank meeting, “taking the policy rate to a level of around 25% or higher could be a good first step,” she said.