Growth across Central and Eastern Europe has been solid in 2005, and the outlook remains positive, especially with euro-zone growth set to improve next year. However, heightened fears of inflation have reduced expectations of further interest rate cuts for now. Rising inflation in Estonia and Latvia in particular has raised concern about their ability to meet the criteria for EMU entry, but if necessary, we believe that one-off changes to administered prices could be used to allow these countries to join EMU as planned, in 2007 and 2008 respectively.