International credit ratings agency Fitch Ratings has announced that it has affirmed Turkey’s long-term credit rating ‘BB-’, while maintaining the country’s outlook stable.
The agency stated that the rating reflects political interference in monetary policies, high inflation and low external liquidity in the context of high financing requirements.
According to the report, since December 2024, the Central Bank of Turkey has begun easing monetary policies by executing two consecutive 250 basis point cuts in policy rates to 45 percent. Fitch expects that the policy rate will be reduced to 28 percent by late 2025, with the central bank forecast to continue its tight monetary policy.
In the meantime, Fitch estimates that Turkey’s average annual inflation will drop to 32.8 percent this year from 60.2 percent in 2024. However, due to still high projected inflation and still volatile market sentiment, inflationary pressures as well as risks to macro-financial stability and the balance of payments could resurface if Turkey rapidly eases monetary policy or abandons its current policy direction.
Also, the agency foresees GDP growth at a slower rate of 2.9 percent for 2024 and that it will trend at 2.6 percent in 2025, due to the continuation of a tight monetary policy stance, significant annual fiscal consolidation and moderate minimum wage increases. The EU’s projected gradual recovery will support net exports.