Fitch Ratings lifted Turkey’s credit outlook to positive from stable on Friday, citing a rise in foreign exchange reserves and a lower risk of policy loosening. The move follows the central bank’s modest rate cut, which fell short of market expectations for investors in the near term.

Turkey’s currency, the lira, has steadied after months of volatility, and the central bank’s decision to trim the benchmark rate by 25 basis points signals a cautious approach to inflation. Investors now weigh the impact on borrowing costs and corporate earnings for the next quarter.

Moody’s, meanwhile, kept its outlook unchanged, maintaining a negative stance. The divergence underscores differing assessments of Turkey’s fiscal discipline and external vulnerabilities. Market participants will monitor upcoming data releases and policy statements for clues on future rating adjustments in the coming months for investors' confidence.

Analysts suggest that a sustained positive outlook could lower Turkey’s borrowing costs, attracting foreign capital and easing pressure on the lira. However, persistent inflation and geopolitical tensions remain risks. Watch for the central bank’s next policy meeting and the IMF’s assessment of fiscal reforms in the next quarter.