S&P raises Turkey’s rating to ‘B+’ on economic rebalancing

Normality. The government is monitoring the bond market shocks, stressing at every opportunity that there is no way the budget will be derailed, despite the tightening monetary policy and the natural disasters. Athens knows the road to normality will be long and even the investment grade rating from S&P this month will not suffice. [EPA]

Credit ratings agency S&P on Friday 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 [Turkey] dropping to single digits until 2028," the agency said in a statement.

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