Market rate expectations have edged down in recent weeks, but we still think that the pace of tightening currently priced in for most countries in the region is too aggressive. While inflation has picked up in some economies (notably Turkey) in recent months, this mostly reflects one-off factors. With the recovery set to disappoint, core price pressures should remain subdued. Accordingly, we expect only modest interest rate hikes in Turkey and Poland this year. And while Hungary and Romania are now nearing the end of their easing cycles, we think that rates will remain at record lows for the foreseeable future.