Growth in some economies in Emerging Europe, not least Turkey, is starting to look impressive. But underlying inflation pressures remain relatively benign, and concerns over the durability of the global recovery mean that policymakers are in no rush to tighten monetary policy. All of the region’s major central banks kept interest rates on hold this month. Looking ahead, Poland is likely to be the first country to start tightening monetary policy. But we still do not foresee a first rate hike until the first quarter of next year. Meanwhile, Turkish policymakers have continued their so-called ‘exit strategy’ from last year’s stimulus measures in recent weeks, notably by further raising banks’ reserve requirements earlier this month. But the main policy interest rate is unlikely to be hiked until Q2 2011. Elsewhere, we expect rate hikes in Hungary, Romania and the Czech Republic to remain off the table until 2012, although in the case of the former, much will inevitably depend on developments in the currency markets.