Hungary’s economy is now under substantial pressure. The forint has slumped and interest rates have been hiked aggressively. The only way through this is to accept the pain of a weak currency and tighter policy in order to take the heat out of demand and alleviate the country’s macro imbalances. Elsewhere, central banks in the rest of CEE have generally also stepped up tightening. The exception is Poland, where the outlook for economic growth prompted the NBP to slow the pace of tightening this week.
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