The Turkish government failed to reduce risks to macroeconomic and financial stability, Fitch Ratings said.

Measures to avoid reversing a 500 basis point cut in interest rates between September and December last year, including new protected currency deposits, failed to achieve their goal, Fitch said in a report.

“Increasingly interventionist and unpredictable policies could further undermine domestic confidence and access to external financing, as the authorities maintain the focus on preserving high growth, in spite of a challenging external environment hitting external finances and rising macroeconomic imbalances,” Fitch said.

Fitch downgraded Turkey's sovereign debt rating to "B," five notches below investment grade, from "B+" last week, citing accelerating inflation and concerns about the economy.

Fitch forecasts annual inflation to average 71.4 percent this year and says the price outlook is highly uncertain. Inflation in June was 78.6 percent.