Moody’s revises Türkiye’s outlook to positive

ISTANBUL

Moody's has revised Türkiye’s outlook from stable to positive, citing it as a “decisive change in economic policy,” in particular the return to orthodox monetary policy.

“While headline inflation is likely to rise further in the near term, there are signs that inflation dynamics are starting to turn, indicative of monetary policy regaining credibility and effectiveness," Moody's said.

There are signs that inflation dynamics are starting to turn, indicative of monetary policy regaining credibility and effectiveness, it added.

“The monetary tightening also improves the prospects for a reduction of Türkiye's large external imbalance and for a rebuilding of the central bank's foreign-currency reserves, both of which would reduce the country's vulnerability to external shocks.”

The company affirmed Türkiye’s rating at “B3,” six notches below investment grade.

Meanwhile, Central Bank Governor Hafize Gaye Erkan told investors in New York that Türkiye is committed to achieving disinflation.

Erkan met with more than 2,000 executives on Jan. 11 at an event at JP Morgan’s headquarters, where she made a presentation on the monetary policy and inflation outlook.

The inflation outlook has improved significantly, Erkan told investors, adding that achieving disinflation is a measure of success. “We are determined to achieve this,” she said.

“Our program is working effectively. But we are not done until the sustainable price stability is attained.”

They will continue to increase foreign exchange reserves, she said, noting that significant progress has been made in boosting reserves.

Meanwhile, Luis Oganes, the head of global macro research at JP Morgan, said the investor day was well-attended by investors across fixed income and equities.

“The Turkish authorities presented their policy agenda and plans to secure disinflation and macroeconomic stability in the period ahead,” Oganes said.