Higher oil prices led to sharp rises in inflation across Central and Eastern Europe (CEE) at the end of 2016, and this has further to run in the next few months. All in all, oil prices are likely to push headline rates up by 0.8%-pt on average by March, although the impact will begin to fade in Q2. Energy prices alone are unlikely to trigger a shift in monetary policy in the region. But with core inflation also strengthening, central banks in Romania and the Czech Republic are likely to rein in extremely loose monetary policy this year.
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