Turkish President Recep Tayyip Erdogan made some of the biggest moves in revamping his economic team by installing three new central bankers that include a former adviser at the Federal Reserve Bank of New York.
Fatih Karahan, Cevdet Akcay and Hatice Karahan will serve as deputies to Governor Hafize Gaye Erkan, a former Wall Street banker appointed last month. They’ll replace Emrah Sener, Taha Cakmak and Mustafa Duman on the Monetary Policy Committee, according to a decision published in the Official Gazette early on Friday.
Fatih Karahan was previously an economic research adviser at the New York Fed and Akcay worked until 2018 as the chief economist of Turkish bank Yapi ve Kredi Bankasi AS for more than a decade, according to their LinkedIn profiles.
The new economic line-up that’s taking shape represents a break in priorities for Erdogan, who’s long advocated unconventional policies that have been blamed for an exodus of foreign investors and an inflation crisis last year. Erkan became the first female chief of the seven-member MPC after long stints in the US at Goldman Sachs Group Inc. and First Republic Bank.
Besides Erkan, Erdogan also installed former Merrill Lynch bond strategist Mehmet Simsek as finance minister in June. Simsek has said Turkey has no choice but to return to “rational policies.”
Read more: Former First Republic Star Erkan Nabs Top Job Back in Turkey
The central bank has been at the heart of the overhaul started by Erdogan after winning reelection in May to extend his rule into a third decade. Under Erkan, policymakers embarked on Turkey’s first monetary tightening cycle in more than two years with increases of interest rates by a cumulative 900 basis points at two straight meetings.
In unwinding years of unorthodox measures, Erdogan’s economic team is also scaling back support for the lira, rebuilding foreign reserves and simplifying regulations that were used to stabilize the Turkish currency.
The new appointments to Turkey’s monetary policy decision-making body are “superb hires” that will replace “less orthodox thinkers,” said Timothy Ash, senior emerging-market sovereign strategist at RBC Bluebay Asset Management.
Erdogan’s Pivot
“Erdogan not only did a 180-degree turn in this but he added a ribbon and brass band playing as well,” he said by email.
The new deputy governors will have the task of helping restore the credibility of an institution still in need of rehabilitation in the eyes of the markets.
Erkan on Thursday made her public debut during the central bank’s quarterly inflation report presentation in Ankara. She delivered a much higher year-end inflation forecast than expected by economists but pledged to stick with a “gradual” cycle of monetary tightening that’s still left Turkey’s rates deeply negative when adjusted for prices.
Read more: New Turkish Central Banker Redraws Inflation Path But Not Policy
Fatih Karahan holds a doctorate degree in economics from the University of Pennsylvania and was most recently a principal economist at the Supply Chain Optimization Technologies at Amazon.com Inc, according to his LinkedIn profile.
Hatice Karahan is Erdogan’s senior adviser and a professor of economics at Istanbul Medipol University.