Fitch Ratings: Global Risk Environment Worsens as New Year Approaches

International credit rating agency Fitch Ratings reported that growing risks regarding the rapid growth in artificial intelligence investments, the impact of geopolitical tensions in the Middle East on energy prices, and tightening financing conditions have worsened the global risk environment as the new year approaches. Fitch updated its 2027 policy interest rate forecast for the Fed to 4.25 percent.

In Fitch's statement, it was pointed out that the new chair of the US Federal Reserve (Fed) has adopted a more hawkish monetary policy approach, and in line with expectations that another rate hike could be implemented this year, the Fed policy rate forecast was updated to 4.25 percent throughout 2027. It was stated that bond yields are expected to stabilize in the baseline scenario and that the US 10-year Treasury yield is projected to decline to 4.8 percent by the end of 2027.

Touching upon the impact of geopolitical developments in the Middle East on energy markets, it was stated that if disruptions in oil shipments via the Strait of Hormuz extend beyond the first quarter of 2027, oil prices could exceed projected levels. Furthermore, it was emphasized that the rapid growth in artificial intelligence investments remains a key agenda item regarding credit risks, and a potential reassessment of expectations could lead to a sharp decline in capital expenditures.