Moody's lifts Turkey's rating to 'Ba3' on improving policy, easing inflation
The outlook was revised to stable from positive, reflecting a balance between ongoing policy gains and lingering political and external risks.
The lift in ratings comes a day after Turkey's central bank cut its benchmark interest rate by a larger-than-expected 300 basis points to 43%, resuming an easing cycle that had been disrupted earlier this year by political turmoil.
Market turbulence in March, triggered by the detention of Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, had prompted an emergency rate hike and drained foreign currency reserves.
"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," Moody's said in a statement.
Since Erdogan's re-election in 2023, Turkish authorities have shifted back to orthodox economic policies, sharply raising interest rates and curbing credit growth to rein in inflation and stabilize the lira.
Inflation slowed to 35% in June 2025, down from 72% a year earlier, according to official data.
Finance Minister Mehmet Simsek said in May that the country's economic transformation was "on track" and that Turkey was prepared to live with slower growth if it meant long-term stability.
"Growth is slower but we can live with that," he said at the annual meeting of the European Bank for Reconstruction and Development.
The Ba3 rating remains below investment grade but signals improved creditworthiness.
Fitch on Friday affirmed its ratings on Turkey at 'BB-' with a stable outlook.
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