New Turkish Central Bank Governor says determined to maintain monetary tightness until inflation falls to target

Duvar English

Fatih Karahan, the recently appointed Governor of the Turkey’ Central Bank, on Feb. 4 stated that they were “determined” to maintain “the necessary monetary tightness” until inflation falls to targeted levels.

In a press statement, Karahan said their main objective and priority “is to achieve price stability.” 

Continuing their efforts “to ensure disinflation,” Karahan noted they “stand ready to act in case of any deterioration in the inflation outlook.”

President Recep Tayyip Erdoğan on Feb. 2 appointed Central Bank Deputy Governor Fatih Karahan as the new chief hours after former Governor Hafize Gaye Erkan's resignation.

Under Erkan's governorship, the bank said after the last policy rate hike in January that they attained the necessary monetary tightness for disinflation and would maintain the 45 percent level as long as needed.

Since Hafize Gaye Erkan took office in June 2023, Turkey’s Central Bank moved course from previous unorthodox economic policies of slashing interest rates, which plunged the country into heavy currency deprecation, low reserves, and skyrocketing inflation.

Since June 2023, the Central Bank has raised the policy rate by 3650 basis points from 8.5 percent to 45 percent.

Erkan on Feb. 2 resigned from her duty, citing "defamation campaign" against her and her family. Erkan said she was resigning to prevent her family from further harm.

The accusations included her father’s involvement in the bank, who allegedly acted as an unofficial manager at the bank, slapping and dismissing a central bank employee and allocating some of the bank’s social facilities to the family.