Moody’s Investors Service on Friday raised Türkiye’s long-term debt rating one notch, from B1 to Ba3, citing an improved track record in monetary policy, easing inflation, and narrowing macroeconomic imbalances.
The agency also revised the country’s outlook to stable from positive, reflecting a balance between ongoing policy gains and lingering political and external risks.
“On the upside, extending the track record of effective policymaking without political interference has the potential to support the improvement in Türkiye’s external position more substantially than we currently assume,” Moody’s said.
The rating came one day after the country’s central bank cut interest rates by 300 basis points to 43%, more than expected, resuming an easing cycle that had been disrupted by political turmoil earlier this year, as markets have since calmed and disinflation continued.
The bank hiked the policy rate to 46% from 42.5% in April, reversing an easing cycle that had begun in December, following market volatility over the arrest in March of Istanbul Mayor Ekrem Imamoglu, who is President Tayyip Erdogan’s main rival.
In its statement released on Friday, Moody’s said, “The upgrade reflects the strengthening track record of effective policymaking, more specifically in the central bank’s adherence to monetary policy that durably eases inflationary pressures.”
Since the re-election of Turkish President Tayyip Erdogan in 2023, Türkiye shifted towards orthodox economic policies, which involved a series of significant interest rate hikes by the Central Bank to combat high inflation and stabilise the Turkish lira.
Türkiye’s annual inflation rate significantly declined to 35% in June 2025, a substantial drop from 72% in the same period a year earlier, according to official figures.
The nation’s Ba3 rating remains below investment grade but signals improved creditworthiness.
