UPDATE - Türkiye's credit rate could turn positive, Moody's says

UPDATES WITH REMARKS BY TURKISH FINANCE MINISTER

By Gokhan Ergocun

ISTANBUL (AA) - Moody's said Türkiye's new economic administration is committed to reducing inflation and external imbalances, and the country's outlook, which is stable, could turn positive.

In a statement on Tuesday, the rating agency said Türkiye "has pledged a return to more orthodox economic policies" after President Recep Tayyip Erdogan's re-election in May.

The agency kept Türkiye's credit rate at B3 stable, which is considered speculative and risky.

It said: "The new economic team has committed to bringing down inflation, reducing Türkiye's large external imbalances and ensuring fiscal discipline, and has started to gradually correct the direction of monetary and fiscal policy.

"The shift towards more orthodox, rules-based and predictable policymaking is credit positive, and comes earlier than we had expected."

It also noted that the country's central bank has started to return to a more orthodox monetary policy setting, increasing the policy rate from 8.5% to 17.5% in two meetings gradually.

Moody's said the bank is expected to continue tightening steps.

Mehmet Simsek, the Turkish treasury and finance minister, said Türkiye is determined to implement rule-based policies in line with international norms to ensure macro-financial stability and increase its resilience to shocks.

"We believe this will reflect on our credit rating," he added.