S&P: Turkey's Policy Shift on Track Despite Slower Disinflation, Election Risk Looms

S&P Global said Turkey's tight monetary stance and shift from unorthodox policies underpin its BB- sovereign rating with a stable outlook, but slower disinflation and upcoming elections will test the central bank's commitment, Reuters reported on Oct. 23. Karen Vartapetov, S&P's sovereign lead analyst for Turkey, said inflation just below 30% annually has been slowed by higher energy prices and successive shocks, though weakening domestic demand, falling retail sales and lower credit growth show tightening is feeding through. "Disinflation has been delayed, but we believe not derailed," he said, adding the central bank cut its key rate to 36% on Thursday after holding at 37% for five meetings. He flagged uncertainty over how sustainable tight policy will prove as elections approach; votes are scheduled for May 2028 but could be held early. S&P will review Turkey's rating in April. Vartapetov called the investment fund crisis a governance and supervision issue rather than a broad financial stability threat, noting most withdrawn money moved into lira deposits.