Erdoğan names new central bank head as former quits amid controversy

Turkish President Recep Tayyip Erdoğan appointed Fatih Karahan as head of the country's central bank, replacing US banker Hafize Gaye Erkan, according to an announcement in the country's Official Gazette late Friday.

Karahan, a former New York Fed economist, has been the deputy governor since July.

Hours before her replacement, Erkan announced a surprise resignation, citing recent reports of alleged misconduct at the bank.

Erkan said on social media platform X, formerly Twitter, she steps down to protect her family and her "innocent child."

In January, the daily Sözcü, which is critical of the government, quoted a central bank employee as saying that she was wrongfully fired from the bank by Erkan's father.

As she came under fire over alleged family interference in top bank affairs, Erkan denied the allegations.

Erkan, appointed in June, is the first woman to hold the post. In the job she hiked the key interest rate to 45% from 8.5%. Market experts welcomed the policy as an attempt to regain investor confidence as Turkey fights record high inflation and depreciating lira.

Finance Minister Mehmet Şimşek vowed on Friday that Erkan's resignation will not mean the end of orthodox economic policies.

Erkan was the fifth governor since 2018. Erdoğan had fired the previous four, raising questions about the bank's independence and credibility in investors' eyes.