Turkiye’s shift toward tighter monetary policy marks a significant change from previous years of unorthodox economic measures, but challenges remain as disinflation slows and elections draw near, according to S&P Global.

Karen Vartapetov, director and sovereign lead analyst for Central and Eastern Europe and Turkiye at S&P Global, highlighted that the country’s current BB- sovereign rating with a stable outlook reflects notable progress made since early 2023. That period marked the beginning of Ankara’s efforts to reverse a prolonged phase of ultra-loose monetary policy, which had aimed at stimulating economic growth despite rising inflationary pressures.

The tighter monetary stance and broader shift in macroeconomic policy are central to the improved sovereign outlook. However, Vartapetov noted uncertainties regarding how durable this approach will be, especially given the potential political pressures ahead. Presidential and parliamentary elections are scheduled for May 2028, but Turkish officials have indicated these may be advanced by a few months, adding to the unpredictability of policy consistency.

Slower progress in reducing inflation poses an additional test for the central bank’s commitment to maintaining fiscal and monetary discipline. The agency suggested that while policy realignment is on track, the erosion of disinflation momentum could challenge policymakers’ resolve as electoral considerations come into focus.

Overall, the assessment underscores the balancing act facing Turkiye’s authorities between continuing efforts to stabilize the economy and managing political dynamics in the run-up to vote. The country’s recent shift to orthodox monetary policy represents a marked pivot from past strategies, but sustaining this course remains contingent on evolving economic conditions and political developments.