Moody’s assessment of Türkiye: steps are positive but important uncertainties exist

Credit rating agency Moody’s said Turkey’s interest rate hike to combat inflation and the appointment of Treasury and Finance Minister Mehmet Şimşek and Central Bank of the Republic of Turkey (CBRT) President Hafize Gaye Erkan, have the potential to raise a credit rating.

Moody’s analyst Dietmar Hornung said: “This change is a positive development for the credit rating” and warned: “However, significant uncertainties remain.”

“The measures we have seen since the elections are encouraging, but the challenges ahead are complex,” Hornung said.

“IT WILL TAKE TIME”

“It will take time to overcome these challenges,” Hornung said, as inflation is forecast to hit 65 percent this year.

Hornung says that mitigating inflation and correcting other “cumulative imbalances” is a challenging task.

Moody’s rates Turkey a “stable outlook” at a B3 rating. Fitch, by contrast, rates Turkey’s credit rating at BB-, one notch below with a “negative outlook.” Fitch will review Türkiye’s credit rating on Friday. (Reuters)