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Central Europe recovering, Russia faltering The rise in the manufacturing PMIs in Central Europe in March adds to evidence that the region is recovering from its recent soft patch. In contrast, the drop in Russia’s PMI suggests the economy may be starting …
1st April 2025
Easing cycle paused, and space for additional rate cuts narrows The Czech National Bank (CNB) left its policy rate on hold today, at 3.75%, and we think that the scope for further interest rate cuts this year has become more limited. We had previously …
26th March 2025
MNB on hold, high inflation to tie new governors hands The Hungarian central bank (MNB) left its base rate unchanged today, at 6.50%, and we think its easing cycle will remain on pause throughout 2025 as inflation remains stuck above target. Analysts have …
25th March 2025
Weak data to bolster calls for monetary easing The weaker-than-expected February retail sales data out of Poland suggests that the economy may have slowed a bit more sharply than we had been anticipating this quarter. While this won’t prompt the central …
24th March 2025
CBR sounds slightly less hawkish at it leaves rates on hold The decision by the Central Bank of Russia (CBR) to leave its policy rate on hold at 21.00% today was accompanied by somewhat less hawkish communications. While we doubt the CBR will cut interest …
21st March 2025
Turkey’s central bank responds with a rate hike The decision by Turkey’s central bank (CBRT) to hike its overnight lending rate from 44% to 46% today suggests that policymakers have been spooked by the market volatility yesterday and are keen to reassure …
20th March 2025
The sharp drop in the Turkish lira on the news that the main opposition leader, Ekrem İmamoğlu, has been arrested will complicate the central bank’s task of bringing inflation down and raises big questions about the government’s ability to sustain …
19th March 2025
NBP on hold, talk of rate cuts in H2 may be premature The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely anticipated, but we think that interest rates will stay higher than most others expect …
12th March 2025
CBRT cuts again, easing cycle has further to run The communications accompanying the decision by the Turkish central bank (CBRT) to cut its policy rate by 250bp again today, to 42.50%, suggest that policymakers were reassured by the fall in inflation in …
6th March 2025
Small signs of improvement in Central Europe The rise in the manufacturing PMIs in Central Europe last month offers some hope that the region’s struggling industrial sector is pulling out of its slump. Elsewhere, Russia’s PMI suggests that overheating …
3rd March 2025
250bp rate cut this week on the cards The weaker-than-expected Turkish inflation figure for February, of 2.3% m/m, will provide some reassurance that the spike in January was a one-off. And it keeps the door open for the central bank to lower the one-week …
Rebound in domestic demand could slow pace of rate cuts The strong 1.7% q/q expansion in the Turkish economy in Q4 appears like a setback to the central bank’s efforts to bring down high inflation, but we don’t think this data is enough to throw the …
28th February 2025
ESIs point to stronger growth, higher inflation The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional growth may hold up a little better than we had been expecting in Q1. That said, firms’ …
27th February 2025
MNB on hold ... and probably for some time The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that its easing cycle will remain on pause throughout 2025. That’s a more hawkish view than the latest consensus …
25th February 2025
BoI leaves rates on hold, but getting closer to easing The communications accompanying the decision by the Bank of Israel (BoI) to leave its policy rate on hold again today, at 4.50%, were slightly less hawkish than at the previous meeting, and support …
24th February 2025
Polish economy starts 2025 on the front foot The stronger-than-expected activity data out of Poland for January suggest the economy has carried over some of the positive momentum from the end of last year. Alongside the recent strength of inflation, this …
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Economy struggling ahead of Hamas ceasefire The slowdown in Israeli GDP growth, to 2.5% q/q annualised, in Q4 suggests the drag on activity from rising tensions with Hezbollah last quarter was a bit larger than we expected. The recent ceasefires with …
17th February 2025
NBR leaves rates on hold, scope for cuts looking increasingly limited The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, and we think there is limited scope for interest rate cuts this year. Our forecast for the policy …
14th February 2025
CBR leaves rates on hold, loosening still some way off The decision by the Central Bank of Russia (CBR) to leave interest rates on hold at 21.00% today was widely expected, and the hawkish communications suggest that policymakers are not going to bend to …
Easing cycle resumes, rates on their way to neutral The Czech National Bank (CNB) cut its policy rate by 25bp today, to 3.75%, and we think that further easing lies in store this year. Our forecast for the policy rate to fall to 3.00% by end-2025 would …
6th February 2025
NBP a long way from resuming its easing cycle The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and we think that interest rates will remain on hold throughout 2025. That’s a more hawkish forecast than the consensus …
5th February 2025
Central Europe struggling as tariff threat looms The manufacturing PMIs in Central Europe rose slightly last month, but the big picture is that they remained at weak levels. And the threat of US tariffs on the EU poses an additional headwind for the …
3rd February 2025
Still on course for another large rate cut The sharp jump in the m/m rate of Turkish inflation, to 5.0%, was largely driven by one-off factors. And so long as the February CPI figures come in much softer (as we expect), we still think it’s most likely …
Signs of improvement, but growth still likely to underwhelm in 2025 GDP data released out of Hungary and Poland today were broadly in line with expectations and suggest that both their economies returned to positive growth at the end of last year, but we …
30th January 2025
MNB waiting patiently to resume the easing cycle The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that the inflation backdrop will result in less easing over the rest of the year than most expect. Today’s …
28th January 2025
250bp cut likely to be follow with another in March The 250bp interest rate cut by Turkey’s central bank (CBRT), to 47.50%, was accompanied by cautious language in the statement. But given signs that underlying inflation pressures are easing , we think …
23rd January 2025
NBP keeps rates on hold, probably for the whole year The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and the inflation backdrop is likely to prevent the restart of the easing cycle for some time. We don’t expect …
16th January 2025
Inflation continues to accelerate The rise in Russian inflation to 9.5% y/y in December is likely to be followed by an increase to more than 10% early this year. The central bank has set a high bar for further tightening but we think the balance remains …
15th January 2025
Easing cycle to stay on pause amid inflation and fiscal risks The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, amid continued concerns about the inflation outlook and the direction of fiscal policy post-election. We …
BoI strikes a slightly more dovish tone as rates stay on hold The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, but the accompanying communications struck a slightly more dovish tone and we think that it will be in a position to …
6th January 2025
Fall in inflation points to 250bp rate cut this month The larger-than-expected fall in inflation in Turkey last month, to 44.4%, points towards another 250bp interest rate cut, to 45.0%, at the next central bank meeting on 23rd January. The outturn was …
3rd January 2025
A rare dovish surprise from the CBR The unexpected decision by Russia’s central bank to leave interest rates on hold at 21.00% today, rather than hike further, sparks a lot of questions about the central bank’s reaction function – and whether it may be …
20th December 2024
Easing on pause as the neutral level approaches The Czech central bank (CNB) left its policy rate on hold at 4.00% today, but we think that the easing cycle will resume before long. We still expect rates to fall towards 3.00% by the end of next year. …
19th December 2024
Rates on hold, new MNB Governor will have little scope to cut in 2025 The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, and we think that a rise in inflation in early 2025 will keep rates on hold until at least the new …
17th December 2024
Surging inflation will force another large rate hike The renewed acceleration in Russian inflation to 8.9% y/y in November, and likelihood of further increases in the coming months, argue strongly in favour of another large interest rate hike from the …
11th December 2024
NBP leaves rates on hold, little scope for easing in 2025 The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and a rise in inflation over the coming months means that the monetary easing cycle won’t resume until the …
4th December 2024
Rate cut in December may be jumping the gun The smaller-than-expected decline in Turkish inflation in November, to 47.1% y/y, suggests to us that a monetary easing cycle probably won’t start later this month as many analysts seem to be expecting. We …
3rd December 2024
Central Europe continues to struggle The PMIs fell deeper into contractionary territory in Poland and Czechia last month, adding to the disappointing run of activity data out of Central Europe. In contrast, the PMIs rose in Turkey and Russia. And an …
2nd December 2024
Centre-left comes out on top, but fragmented coalition likely The centre-left Social Democrats (PSD) – the largest party in Romania’s current coalition – look set to win the most votes in the parliamentary election which took place on Sunday, but strong …
Rebalancing underway The 0.2% q/q contraction in the Turkish economy in Q3 suggests that policymakers’ efforts to weaken demand and tame high inflation are taking effect. We still think that it would be premature for the central bank to start an easing …
29th November 2024
Economy bounces back at the start of Q4 The stronger-than-expected Polish activity data for October suggest that the contraction in the economy in Q3 wasn’t the start of a renewed trend. With fiscal policy set to remain loose over the coming year and …
26th November 2024
BoI on hold as upside inflation risks remain The Bank of Israel (BoI) left its policy rate on hold again today, at 4.50%, and the accompanying communications suggest that the risk of a return to interest rate hikes has receded over the past month. Even …
25th November 2024
Shock victory for far-right candidate raises risks for Romania The surprise lead for an independent far-right candidate, Călin Georgescu, in the first round of Romania’s presidential election raises the risk of an abrupt shift towards more populist …
Interest rate cuts still a few months away (at least) The communications accompanying the decision by the Turkish central bank (CBRT) to leave its policy rate unchanged again today, at 50.00%, suggest that analysts’ expectations for an easing cycle to …
21st November 2024
Recession not enough for MNB to resume easing The Hungarian central bank (MNB) left its base rate on hold again today, at 6.50%, despite the economy having just fallen back into recession. We think that the easing cycle will remain on pause over the next …
19th November 2024
Poland’s economy stumbles in Q3 The 0.2% q/q contraction in Polish GDP in Q3 partly reflects the impact of flooding in September, the impact of which will reverse this quarter. Even so, we have become a bit more concerned about underlying weakness in the …
14th November 2024
Growth slowing, but inflation pressures still strong The slowdown in Russian GDP growth in Q3, to 3.1% y/y, is likely to be followed by a further loss of momentum in growth over the coming quarters. But, alongside CPI data which show that inflationary …
13th November 2024
Easing cycle on pause, waiting for more clarity on fiscal policy The National Bank of Romania (NBR) left its policy rate on hold again today, at 6.50%, against a backdrop of stubborn above-target inflation and concerns about the loose fiscal stance ahead …
8th November 2024
Easing cycle to continue, but risk of slower pace of cuts The Czech National Bank (CNB) cut its policy rate by 25bp again today, to 4.00%, and we still think that the conditions will be in place for the policy rate to be lowered to its estimated neutral …
7th November 2024
