Fitch cuts Turkey's ratings after sacking of central bank head

Fitch cuts Turkey's ratings after sacking of central bank head

Fitch Ratings downgraded Turkey’s credit rating from "BB+" to "BB-" with a negative outlook, after Turkish President Recep Tayyip Erdogan sacked governor of the central bank Murat Cetinkaya.

Fitch Ratings also downgraded Turkey's long-term foreign-currency issuer default rating (IDR) to 'BB-' from 'BB' with a negative outlook, Sputnik reported.

The firing of Cetinkaya last weekend for failing to follow government instructions "risks damaging already weak domestic confidence," Fitch said in a statement. It also could jeopardize foreign investment, which the country needs and create "worsening economic outcomes."

Turkey’s main interest rate is 24% after the bank under Cetinkaya made an aggressive rate hike of 625 basis points in September 2018, in reaction to a currency crisis in August.

"The president has regularly expressed unorthodox views on the relationship between interest rates and inflation, and has indicated the governor was replaced because he did not follow government instruction on interest rates," Arab News cited Fitch as saying.

It also "highlights a deterioration in institutional independence and economic policy coherence and credibility." Turkey's inflation rate fell to 15.7% in June from 25.2 in October 2018.