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Turkey's new central bank head plans tight monetary policy until inflation curbed

Published 02/04/2024, 02:27 PM
Updated 02/04/2024, 02:30 PM
© Reuters. FILE PHOTO: A logo of Turkey's Central Bank is pictured at the entrance of its headquarters in Ankara, Turkey October 15, 2021. REUTERS/Cagla Gurdogan/File Photo

ANKARA (Reuters) - Turkey's newly appointed central bank governor Fatih Karahan said on Sunday that his team is determined to maintain tight monetary policy until inflation falls to levels consistent with their target.

Karahan replaced Hafize Gaye Erkan on Saturday, hours after she resigned saying she needed to protect her family amid a "reputation assassination".

In his first remarks after his appointment, Karahan said the priority was price stability, and that he would continue efforts to ensure disinflation, relying on a strong team.

"We will be watchful of inflation expectations and pricing behaviour. We stand ready to act in case of any deterioration in the inflation outlook," Karahan said in a written statement.

Karahan, 42, has a University of Pennsylvania economics PhD and worked as an economist at the Federal Reserve Bank of New York for almost a decade, according to his biography.

He also taught as an adjunct professor at Columbia University and New York University and worked for Amazon (NASDAQ:AMZN) as a principal economist in 2022.

Finance Minister Mehmet Simsek said on Sunday that he was looking forward to working with the new governor and his team in implementing his government's economic program.

"Governor Karahan is an excellent fit. With extensive experience, most of which was with the Federal Reserve Bank of New York, I have no doubt he will excel in this new role," Simsek said on social media platform X.

"We are committed to supporting the disinflation process through restoring fiscal discipline, while also implementing structural reforms," he added.

Before being appointed to his new position on Saturday, Karahan was a deputy governor and a member of the bank's monetary policy committee since July last year.

Appointing one of the deputy governors to head the bank supports the Turkish finance ministry's assertion that the current central bank strategy is fully supported by President Tayyip Erdogan, Goldman Sachs said in a note to clients.

© Reuters. FILE PHOTO: A logo of Turkey's Central Bank is pictured at the entrance of its headquarters in Ankara, Turkey October 15, 2021. REUTERS/Cagla Gurdogan/File Photo

"We therefore view the appointment as positive as it should allay any concerns over a near-term loss of political support for the Bank," it said.

The new governor's first public appearance will be in Ankara on Thursday when he will hold a briefing on the first inflation report of the year, the central bank said in a statement.

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