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- U.S. Treasury Department official Hafizeh Gay Elkann has been appointed as Turkey’s new central bank governor.
- His appointment, along with new economy minister Mehmet Simsek, could signal the normalization of Turkey’s monetary policy after years of ultra-low borrowing costs and high inflation.
Exterior of the Central Bank of Turkey, known as Turkiye Cumhuriyet Merkez Bankasi, in Ankara.
Null Photo | Null Photo | Getty Images
Turkish President Recep Tayyip Erdogan has appointed former Wall Street banker Hafize Gay Erkann as the country’s new central bank governor. This is yet another move that could mark a shift in policy away from economic illegitimacy.
Erkan, Turkey’s first female central bank governor, was a former managing director of Goldman Sachs and co-CEO of First Republic Bank.
He is also Turkey’s fifth central bank governor in four years.
Analysts said his appointment alongside new economy minister Mehmet Simsek could signal the normalization of Turkey’s monetary policy after years of ultra-low borrowing costs and high inflation. there is
“Considering his training at Princeton University and his top-level experience in the US banking sector, I think the new president will return to orthodox policies,” said Selva Demiralp, an economics professor at Koc University in Istanbul. told CNBC. Post.
The caveat will be to what extent and to what extent central banks can exercise autonomy, but Demiralp said investors need to wait and see.
The verdict could come as early as two weeks after the central bank convenes an interest rate meeting.
Demiralp said he expected a rate hike at the next central bank meeting and that “raising the policy rate to a level above about 25% could be a good first step.”
Turkish President Recep Tayyip Erdogan last weekend appointed former Economy Minister Simsek as the new finance and economy minister. He was known for his market-friendly policies.
Timothy Ashe, senior emerging markets sovereign strategist at BlueBay Asset Management, told CNBC that Elkann’s appointment as central bank governor “would make the market doubly happy.”
He said both Elkann and Simsek would make a “first-class team.”
Elkann’s predecessor, Sahap Kabchool, was appointed head of the Banking Regulatory Authority (BRSA), according to the official gazette.
“Simsek and Erkan will be judged by monetary policy moves, inflation and the lira. said Ashe. said in a tweet.
“The appointment of Kavchoglu at BRSA complicates things for Simsek,” Ashe said. another tweetHe added that the market will be watching whether the Simsek-Erkan partnership can deliver enough policy tightening to save the freefall lira.
Erdogan had sacked Kafchool’s predecessor, Nasi Agbar, in March 2021, two days after the central bank raised interest rates.
The Turkish lira has been declining since President Erdogan’s re-election, last trading at 23.47 against the dollar.
The country’s annual inflation rate in May hit a figure of 39.59%. In October last year, Turkey’s inflation rate rose to a high level of 85.51%.
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