Central Banks across the region are turning hawkish, despite the fact that their counterparts in the West are adopting an increasingly dovish stance in the face of a global economic slowdown. The problem for policymakers in Emerging Europe is that inflation pressures have continued to mount as spare capacity dwindles. The National Bank of Poland is likely to follow up last month’s 25bps hike in interest rates with further tightening. Interest rates also have further to rise in the Czech Republic. Meanwhile, a recent bout of currency weakness is likely to prompt a pause in the easing cycle in Turkey, while similar concerns look set to prompt a rate hike in Hungary.