While Fitch Ratings, Moody's and the Japan Credit Rating Agency (JCR) are keeping them at “investment” grade, and Standard & Poor's (S&P) at one level below, negative signals over Turkey’s credit ratings are not dissipating. 

Ratings agencies have begun to use the word “lowering” following the Central Bank’s decision to reduce the ”political interest rate” — so much so that even Fitch Ratings, which had earlier upgraded Turkey to “investable,” is now warning of downgrading.

A day after the Central Bank meeting on May 22 that resulted in a decrease of the interest rate by half a point, Fitch issued a warning: “As inflation rises toward double digits, a reduction in interests affects predictability. … Turkey continues to be vulnerable to adverse external shocks. Political consistence in Turkey is weaker than countries with similar conditions. Increases in credits could be a negative element toward decreasing the grade.”

Paul Rawkins, Fitch Ratings’ senior manager for country grading, said on May 1 that in case of less predictability of government policies, there will be pressure on credit ratings.