عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Moody’s Places Israel’s A1 Ratings on Review for Possible Downgrade 

A demonstrator carries a banner decorated with the Israeli flag prior to a march in support for Israel in West Los Angeles to the Museum of Tolerance, Sunday, Oct. 15, 2023. (AP)
A demonstrator carries a banner decorated with the Israeli flag prior to a march in support for Israel in West Los Angeles to the Museum of Tolerance, Sunday, Oct. 15, 2023. (AP)
TT
TT

Moody’s Places Israel’s A1 Ratings on Review for Possible Downgrade 

A demonstrator carries a banner decorated with the Israeli flag prior to a march in support for Israel in West Los Angeles to the Museum of Tolerance, Sunday, Oct. 15, 2023. (AP)
A demonstrator carries a banner decorated with the Israeli flag prior to a march in support for Israel in West Los Angeles to the Museum of Tolerance, Sunday, Oct. 15, 2023. (AP)

Global ratings agency Moody's on Thursday placed Israel's A1 ratings on review for a possible downgrade, citing the ongoing military conflict with the Palestinian group Hamas.

Israeli Defense Minister Yoav Gallant told troops gathered at the Gaza border on Thursday that they would soon see the Palestinian enclave "from inside", suggesting an expected ground invasion with the aim of annihilating Hamas could be nearing.

"While a short-lived conflict could still have credit impact, the longer lasting and more severe the military conflict, the greater its impact is likely to be on policy effectiveness, public finances and the economy," Moody's said.

There has been a huge spike in the cost of insuring Israel's government debt using what are known as credit default swaps (CDS). Investors use CDS either as a protection tool or to speculate and last week the cost of buying Israel CDS surged 80%.

Israel has never been downgraded by any of the three main ratings agencies - S&P Global, Moody's and Fitch.

Earlier this week, rival rating agency Fitch placed the country on rating watch negative and warned a major escalation of the ongoing conflict could result in a negative rating action.

Most Viewed

 
 
Business

Turkish Cenbank Inflation Forecasts Unchanged, Vows Tight Policy

Business and residential buildings are seen in Sisli district, in Istanbul, Türkiye, July 26, 2024. REUTERS/Dilara Senkaya
Business and residential buildings are seen in Sisli district, in Istanbul, Türkiye, July 26, 2024. REUTERS/Dilara Senkaya
TT
TT

Turkish Cenbank Inflation Forecasts Unchanged, Vows Tight Policy

Business and residential buildings are seen in Sisli district, in Istanbul, Türkiye, July 26, 2024. REUTERS/Dilara Senkaya
Business and residential buildings are seen in Sisli district, in Istanbul, Türkiye, July 26, 2024. REUTERS/Dilara Senkaya

The Turkish Central Bank has left its mid-point inflation forecasts for end-2024 and end-2025 unchanged at 38% and 14% respectively, Governor Fatih Karahan said on Thursday, vowing to maintain a tight monetary policy stance.
In a briefing on the bank's latest quarterly inflation report, Karahan said that inflation was projected to fall to 9% by the end of 2026.
"We will decisively maintain our tight monetary policy stance until price stability is achieved," he said. "By maintaining the cautious stance in monetary policy, we envisage that inflation will decline steadily in the rest of the year."
Turkish annual consumer price inflation eased to 61.78% in July, accelerating what is expected to be a sustained slide. Economists see end-year inflation around 42%, Reuters reported.
The bank has raised its policy rate by 4,150 basis points since June last year, but has kept it unchanged at 50% since March to allow the tightening to have an impact.
Karahan said a tight monetary policy stance could be maintained even when the time comes for rate cuts.
"We need to maintain the tight stance for a long time. This does not mean that interest rates will never be cut. A tight stance can be maintained with rate cuts," he said.
The lira was largely flat at 33.5225 to the dollar after his comments, having touched a record low of 33.6700 earlier this week.
EXPECTATIONS CRITICAL
Karahan said the bank's "decisive" monetary policy stance would support the downtrend in monthly underlying inflation amid rebalancing in domestic demand, real appreciation of the lira and the improvement in inflation expectations.
"The convergence of inflation expectations to the forecast range is of critical importance for disinflation," he added.
In its last quarterly report in May, the bank nudged up its year-end inflation forecast to 38% from a previous 36% due to an unexpectedly large rise in the first four months of the year.
The tightening cycle over the last year marked a stark turnaround after years of unorthodox economic policy under President Recep Tayyip Erdogan, who in the past urged low rates despite rising prices.
On July 26, Deputy Governor Cevdet Akcay told Reuters that the bank was not even considering a rate-cutting cycle at this time as easing too early could reignite inflation and extend the pain for an economy on the verge of disinflation.
As it seeks to cool the economy, the bank is also rebuilding foreign reserves which had plunged under previous economic programs that had sought to stabilize the lira.