2023-12-18 10:16:00
A former Wall Street executive, the latter arrived in June at the head of the Turkish central bank and is therefore taking advantage of her particular case to denounce a situation that has become extremely critical for many citizens there. But she also defends the central bank’s balance sheet.
A governor who doesn’t have her tongue in her pocket
”As a result of certain measures, we see a decline in the prices of products such as automobiles, household appliances and furniture, which are most affected by monetary policy. And we expect this phenomenon to become widespread from the first quarter of 2024. We also see that the increase in rental prices has slowed down. But it takes time for rents to stay below inflation. All this shows that monetary policy is starting to work,” she reassures in the columns ofLiberty. “We will see a slowdown in price increases in service sectors such as transportation and restaurants by the end of 2024. It will be a little slower in sectors such as rents and education,” she also added. A communication stunt? We can ask ourselves the question. But prices indeed seem to have gotten out of control.
Hafize Gaye Erkan, the new governor of the Turkish Central Bank
And the governor is not the type to keep her tongue in her pocket. She had already denounced in the past that she had not been able to find an internship in Turkey because of widespread favoritism, according to her.
The only daughter of a mother who taught mathematics and a father who was an engineer, she joined Goldman Sachs in the mid-2000s after completing her thesis. She stayed there for nine years, before joining First Republic Bank for a few years.
Returning to Turkey after nearly twenty years in the United States, the Turk must therefore manage the country’s monetary policy, inflation, and this in a complex relationship with President Erdogan, who, for his part, believes that the rates of High interest rates encourage inflation. This goes against most economic theories, since in general, low rates stimulate borrowing, devalue the currency, promote demand but generally in return cause a form of inflation.
But according to the Turkish president, these high rates to slow inflation are “lobbying” from abroad and “usury” which goes against Islamic precepts. Let us remember, however, that inflation reached 40% last May, before the governor’s arrival at the head of the Turkish central bank.
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