Business · Economy · 12 hrs ago
S&P says Turkey’s inflation fight faces a test ahead of 2028 elections
Turkey has shifted to higher interest rates since 2023 to slow spending and bring inflation down.
Annual inflation fell to 29.73% in September, but prices are still rising, only more slowly.
S&P says the slowdown in inflation is delayed, not derailed, as higher energy costs and other shocks have slowed progress.
The central bank cut its key rate from 37% to 36% on Thursday, while saying it would keep policies aimed at price stability.
The 2028 elections could test the government’s commitment to those policies as voting approaches.
S&P says risks to banks are significant but manageable, and sees a crisis involving more than 100 investment funds as a supervision problem rather than a threat to the financial system as a whole.
S&P is due to review Turkey’s credit rating in April 2027.
S&P Global says Turkey’s progress in curbing inflation could be tested as elections approach in 2028.
The agency’s BB- sovereign credit rating, with a stable outlook, reflects progress since Turkey shifted to tighter economic policies in 2023.
The central bank cut its benchmark interest rate to 36 percent from 37 percent after holding it steady for five consecutive meetings.
Annual consumer inflation fell to 29.73 percent in September from 31.51 percent in August.
S&P described the investment fund crisis as a governance and supervision problem rather than a broad threat to financial stability.
- Who
- S&P Global analysts Karen Vartapetov and Regina Argenio discussed Turkey’s economic outlook and risks.
- What
- S&P says Turkey’s inflation policies are making progress, but their durability could be tested ahead of elections.
- When
- The reports were published on October 23, 2026. Presidential and parliamentary elections are scheduled for May 2028.
- Where
- Turkey.
- Why
- S&P is monitoring whether the government maintains tight monetary and economic policies as elections approach.
This story does not have two clearly opposing sides.
Ankara began shifting away from years of low interest rates and toward tighter economic policies.
Annual consumer inflation was 29.73 percent, down from 31.51 percent in August.
The central bank cut its benchmark interest rate to 36 percent from 37 percent.
S&P’s next review of Turkey’s credit rating is scheduled.
Presidential and parliamentary elections are scheduled, though officials have indicated they could take place a few months earlier.
- Sovereign rating
- BB- with a stable outlook
- Benchmark interest rate
- Cut to 36 percent from 37 percent
- Annual consumer inflation
- 29.73 percent in September, down from 31.51 percent in August
- Scheduled elections
- Presidential and parliamentary elections in May 2028
- Investment fund liquidations
- Regulators ordered more than 100 funds to be liquidated
2 sources
What people are saying
Disinflation has been delayed, but we believe not derailed
It's still not clear how sustainable these tight monetary and macroeconomic policies are in light of the upcoming electoral effects. That's what we're monitoring
We treat that story as a governance story rather than a broad-based financial crisis