That stance “has enabled Turkish authorities to stabilise the lira, bring down inflation, rebuild reserves, and de-dollarise the financial system”, S&P said in a statement.

The country also saw its savings gap with the rest of the world narrow, it noted.

Turkey’s central bank began to raise interest rates last year in efforts to battle soaring prices, after President Recep Tayyip Erdogan dropped his opposition to orthodox monetary policy that calls for rate hikes to tame inflation.

The bank has since ratcheted up its principal rate from 8.5% to 50%, between June 2023 and March 2024, to curb inflation.

It has held at that level since.

S&P said it did not expect changes to its outlook in the medium-term, as authorities carry out “ambitious plans to bring down still elevated inflation, manage workers’ wage expectations, and rebalance the Turkish economy”.

Turkish inflation officially slowed in September to 49.38% compared to the year-ago period, after highs of 85.5% in October 2022 and 75.45% in May.