The markets are now pricing in relatively aggressive monetary tightening from mid-2010 in most countries in Emerging Europe but we think that three factors will keep rates much lower than investors currently expect. First, the pace of recovery is likely to disappoint. Second, inflation is unlikely to be an issue anywhere next year. And finally, with fiscal policy set to tighten in almost every country, it will fall to monetary policy to support what is likely to be an extremely fragile recovery. We expect modest hikes in Turkey from Q3 next year and in Poland and the Czech Republic from Q4. But interest rates in Hungary and Romania still have further to fall.