May 6, 2024
Credit ratings agency S&P upgraded Turkey’s ratings to “B+” from “B”, saying that the coordination between monetary, fiscal, and income policy is set to improve, amid external rebalancing.
The credit action comes a week after the Turkish central bank kept its policy rate unchanged at 50%.
Turkey’s central bank, which announced a 500 basis-point rise in March, said on Friday that inflationary pressures remained alive.
The central bank has hiked rates by 3,650 basis points since June last year.
The ratings agency said it could consider raising Turkey’s sovereign rating if policymakers manage to reduce inflation, restore confidence in the lira, narrow current account deficits, and reverse dollarization.
“We don’t anticipate the inflation rate in Turkiye dropping to single digits until 2028,” the agency said in a statement.
Turkish annual consumer price inflation climbed to 69.8% in April, official data showed on Friday, a bit below expectations but the highest since late-2022 on strong rises in education, restaurants and hotels prices.
While maintaining Turkey’s “Positive” outlook, S&P said it could revise the outlook if the pressures on the country’s financial stability or wider public finances intensified, potentially in connection with continued currency depreciation and a shift away from anti-inflationary policies.
Source: Reuters
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