The Fitch credit ratings agency revised Türkiye's outlook Friday from "negative" to "stable" and affirmed its "B" rating.
"The revision of the Outlook to Stable reflects the return to a more conventional and consistent policy mix that reduces near-term macro-financial stability risks and eases balance of payments pressures," Fitch analysts said in a note.
"There is still uncertainty regarding the magnitude, longevity and success of the policy adjustment to bring down inflation, partly due to political considerations."
Fitch forecasted that the Turkish central bank will lift its policy rate to 35% by the end of 2023 and remain at that level in 2024 while also noting the "high degree of uncertainty about the future pace and duration of monetary policy tightening".
It said the country's gross international reserves have "noticeably" recovered since mid-May, and forecasted that they will reach $115 billion by the end of 2023 and remain relatively stable in 2024.
Fitch forecasted end-year inflation at 65%, averaging 51.9% in 2023.
It also projected Türkiye's growth to reach 4.3% in 2023 before slowing to 3.0% in 2024.
Fitch noted that "near-term political uncertainty has declined" after the presidential and parliamentary elections in May.
"Post-elections, Turkiye has moved quickly to reduce tensions with NATO allies, signaled its intention to revive the negotiation process for the upgrade of the Customs Union with the EU and continued to rebuild relations with countries in the region," it said, while noting the country's diplomatic role in the war in Ukraine.