Fitch warns of Turkey credit rating cut

Fitch warns of Turkey credit rating cut

Fitch has warned that it could cut Turkey’s sovereign credit rating if the country’s new central bank governor swiftly reverts to cutting interest rates and reignites turmoil in its currency and bond markets.

The lira has plunged more than 9% this week after President Recep Tayyip Erdogan replaced hawkish former central bank chief Naci Agbal with Sahap Kavcioglu, who, like Erdogan, has been critical of raising interest rates.

Fitch said on Tuesday the move had damaged the central bank’s credibility.

It only took Turkey off a downgrade warning last month amid signs it was pursuing more orthodox monetary policy under Agbal to curb double-digit inflation.

Asked by Reuters whether reverting to rate cuts could reverse that move and trigger a downgrade, Fitch’s managing director of sovereign ratings, Tony Stringer, said, “It is something that could contribute to us reviewing the rating, that is for sure.” 


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