Fitch upgrades Turkey's sovereign rating to B+ on tighter monetary policies

Fitch upgraded Turkey's rating to "B+" from "B" on Friday, saying tighter approaches to monetary policy were helping combat inflationary trends.
 

The change comes after Turkey's central bank left its key interest rate steady in February.
 

"Upgrade reflects increased confidence in the durability and effectiveness of policies implemented since the pivot in June 2023," Fitch said. It also upgraded the country's outlook to positive from stable.
 

After President Tayyip Erdogan's re-election in May, Turkey abandoned its unorthodox low interest rate policy in favour of tightening. It has raised its key rate to 45% from 8.5% since June.
 

Inflation subsequently rose to an annual 67.07% in February, exceeding expectations and keeping up the pressure for tight monetary policy. Economists expect it to decline to around 40% by the end of the year.
 

Turkish Finance Minister Mehmet Simsek said the rating upgrade was a concrete result of the government's economy programme as well as its rule-based and predictable policies.
 

"Macrofinancial stability will be further strengthened and our credit rating will increase in H2 with disinflation, narrowing current account deficit and budget discipline," Simsek added on social media platform X.
 

Turkey is expected to take more policy steps to cool inflation after local elections on March 31, setting the stage for more pain for Turks already struggling after years of soaring prices, according to data and some economists.