Türkiye’s new economic administration is committed to reducing inflation and external imbalances, and the country’s outlook, which is stable, could turn positive, international credit rating agency Moody’s said in a statement on Tuesday.

The rating agency said Türkiye "has pledged a return to more orthodox economic policies" after President Recep Tayyip Erdoğan’s reelection in May.

The agency kept Türkiye’s credit rate at B3 stable, which is considered speculative and risky.

It said: "The new economic team has committed to bringing down inflation, reducing Türkiye’s large external imbalances and ensuring fiscal discipline and has started to gradually correct the direction of monetary and fiscal policy.

"The shift toward more orthodox, rules-based and predictable policymaking is credit positive and comes earlier than we had expected."

Since winning reelection last month, Erdoğan has appointed Mehmet Şimşek, who is highly regarded by financial markets, as the new treasury and finance minister, as well as a new central bank governor, Hafize Gaye Erkan, a former senior U.S.-based bank executive, in moves seen as heralding a switch to tighter interest rate policy.

Şimşek won the markets’ confidence during terms as finance minister and deputy prime minister between 2009 and 2018. In his first remarks after taking office, he said the country has no choice but to return to "rational ground" regarding economic policies.

The minister said Thursday that Türkiye is determined to implement rule-based policies in line with international norms to ensure macro-financial stability and increase its resilience to shocks.

"We believe this will reflect on our credit rating," he added.

In an interview with Turkish media, Şimşek also said most recently that Türkiye aims to lower soaring inflation permanently after a transitional period where prices remain high.

"Our goal is to bring down inflation permanently after a transitional period," Şimşek said.

"As you can see from the central bank’s projections, inflation will continue to rise temporarily due to certain factors in the coming months," Şimşek said.

"We have implemented some tax regulations to improve budget balances and address the aftermath of the earthquake. These tax adjustments are indeed inflationary, but they will not be repeated. These are one-time adjustments we have made."

Moody’s also noted that the country’s central bank has started to return to a more orthodox monetary policy setting.

The central bank, under its new governor, has raised its key rate by 900 basis points to 17.5% since June, though the pace of tightening missed market expectations. Last week it more than doubled its year-end inflation forecast to 58%, meeting expectations.

Moody’s said the bank is expected to continue tightening steps.

Inflation touched a 24-year peak of 85.5% last October. It subsequently eased due to a relatively stable currency and the so-called base effect but then rose sharply again in July to nearly 48%.

Şimşek said increasing the predictability of economic policies was one of the main goals to attract foreign investment into the country.

"As uncertainty decreases and the current account deficit narrows in the coming period, there will be an increase in capital inflows to Türkiye. I believe we will move toward relative stability in the exchange rate, and this will also have a positive impact on the inflation outlook."

Şimşek also said he expected the "productive discussions" Türkiye had last month with Gulf countries regarding investments to bear fruit starting this year.