Emerging Europe

Emerging Europe Economics Update

Emerging Europe Economics Update

CBRT: rates held in pursuit of “new economic model”

Turkey’s central bank (CBRT) followed kept its one-week repo rate on hold at 14.00% today and, even though inflation is likely to breach 40% in the coming months, President Erdogan is unlikely to permit interest rate hikes. We think it’s more likely that further easing will be delivered later this year. Drop-In: Turkey’s new economic policy = old problems (Thurs 20th Jan, 09:00 ET/14:00 GMT). William Jackson and Jason Tuvey discuss the economic problems associated with the lira’s collapse, including the government’s policy response. Register here.

20 January 2022

Emerging Europe Economics Update

The implications of the Russia-Ukraine crisis

The deadlocked end to talks between Russia, the US and NATO and subsequent hawkish noises from Russian officials have caused a risk premium to emerge on Russian asset prices and will keep the prospect of tighter Western sanctions on the table. The downside risks for the ruble and Russian assets are building, as are the upside risks for European natural gas prices. In view of the wider interest, we are also sending this Emerging Europe Economics Update to clients of our Commodities Overview, Energy, FX Markets and Global Markets services.

14 January 2022

Emerging Europe Economics Update

Key calls for Emerging Europe in 2022

We think GDP growth will come in below expectations this year. Even so, inflation will ultimately settle at a higher level than is currently appreciated and this feeds into our hawkish interest rate forecasts. We expect currencies to struggle in an environment of rising US interest rates. Meanwhile, we think Turkish policymakers will stick with the “new economic model” of low interest rates and a weak lira.

10 January 2022
More Publications

Emerging Europe Economics Update

CEE: wage-price spiral a growing risk in 2022

With central banks across Central and Eastern Europe (CEE) raising interest rates to tackle inflation, we think the risks of a wage-price spiral are low. Even so, persistently above-target inflation, tight labour market conditions and strong domestic demand are all reasons to worry about one taking hold this year.

Emerging Europe Economics Update

NBP tightening continues as inflation hits fresh high

The National Bank of Poland (NBP) raised its policy rate by another 50bp, to 2.25% today and we expect at least another 75bp of tightening, to 3.00%, in the next few months. But with energy bills set to surge and wage pressures strengthening, the risks are becoming increasingly skewed to even further tightening.

Emerging Europe Economics Update

CNB delivers another hawkish shock

The Czech National Bank (CNB) hiked rates by 100bp (to 3.75%) today and Governor Rusnok struck an incredibly hawkish tone after the meeting. The tightening cycle clearly has further to run and we now think the CNB will bring interest rates to 4.50% by early-2022 (previously 3.75%).

Emerging Europe Economics Update

First thoughts on Turkey’s FX-indexed deposit scheme

A new scheme announced by Turkey’s President Erdogan last night, which compensates holders of lira deposits for exchange rates losses, has triggered a sharp rally in the lira and will help to mitigate some of the risks that had started to crystalise in the banking sector. But the policy pushes exchange rate risks to the public finances – up till now a point of strength in the economy.

Emerging Europe Economics Update

Turkey’s crisis in four charts

Following yesterday’s interest rate cut in Turkey, the lira has plunged again and is now faring worse than other Emerging Europe currencies have done during recent sudden stops. There are some signs of stress emerging in the banking sector. These aren’t at the stage yet that will get policymakers to turn course nor result in a more severe crisis, but this is a key area to watch.

1 to 8 of 480 publications
See More ↓