International rating agency Fitch has slashed Turkey’s debt rating to B from B+, citing government policies that have reportedly contributed to “spiraling inflation” and discouraging capital inflows.
The agency also forecast annual inflation to average 71.4% in 2022, the highest of any country rated by Fitch, adding that its trajectory remains highly uncertain.
The agency expects average inflation to slow to 57% in 2023 amid overly accommodative policies until parliamentary and presidential elections that are scheduled for June 2023.
“Guided by political considerations, the central bank has maintained its policy rate at 14% since December 2021, despite rapidly rising inflation, the impact of the war in Ukraine on commodity markets and tightening monetary policy in most advanced economies,” Fitch said on Friday.
The Central Bank of Turkey has kept its policy rate unchanged this year even as annual inflation…