Fitch Ratings revised Turkey’s outlook to negative, confirming its rating at (bb-) and lowering Turkey’s long-term debt default outlook to negative from stable.
Fitch said that Turkey’s outlook adjustment reflects the central bank’s monetary easing policy ahead of time, noting that its assessment reflects weak monetary policy credibility, high inflation, lack of external liquidity and geopolitical risks. .
The credit rating agency predicts that inflation in Turkey will rise to 25% by the end of 2021.
The Turkish lira broke the $ 14 barrier last Tuesday, in its worst setback, and although it improved slightly, it lost 47% of its value. in one year.
Furthermore, the inflation rate is close to 20%, in addition to the decline in confidence in the economy index for the month of November by 2%, according to a previous report by the government’s Institute of Statistics, which also confirmed that the rate growth exceeded 7% in the third quarter, amid expectations that the growth rate in 2021 will reach 10% according to Turkish President Recep Tayyip Erdogan.
Erdogan tries to fight high interest rates and, in order to achieve his economic strategy, he sacked 3 central bank governors within a year, which negatively impacted investor confidence, for what they considered a direct interference in policies and in the decisions of the central bank, which recently responded to Erdogan’s wish and cut interest rates on an annual basis by 400 basis points, from 19% to 15% at the end of September.
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