Fitch: Uncertainty continues in Turkish economy
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Credit rating agency Fitch stated that the CBRT’s rate hike is in line with the goals of the new economy team, but that policy makers may have difficulty reducing uncertainty due to the gradual approach.
Credit rating agency Fitch said, “Turkey continues to change its economic policy, but the gradual change fails to reduce uncertainty.”
He pointed out that the Central Bank’s second rate hike last week was in line with the new economy team’s goal of returning to a rational monetary and fiscal policy, but that this approach, which was decided to be gradual, could make it difficult for policy makers to restore investor confidence and reduce uncertainty.
AUTHORITIES CAN BE FORCED
Officials may struggle to permanently restore investor confidence, mitigate risks to macro-financial stability and mitigate external vulnerabilities, Fitch said in an assessment released Friday night.
In the note, it was stated that the monetary conditions and regulations that distorted the markets were gradually approaching normalization by removing the regulations, and that the policies implemented in the past were abandoned for political reasons, increasing these risks.
‘LOCAL ELECTIONS LIMIT CHANGE’
Fitch stated that President Tayyip Erdogan’s views on the policy rate and the existing political calendar, including the local elections in March 2024, may limit the scope of a “decisive” sharp change in monetary and fiscal policy.
Fitch pointed out that it will take time to permanently reduce uncertainty, as Ankara has abruptly changed its mind in the past in monetary and fiscal policy, loosened its monetary policy prematurely, and made constant changes in the management of the central bank. (REUTERS)
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