Central Europe: central banks to shrug off high inflation

The recent rise in inflation to multi-year highs across most of Central Europe has only a little further to run, but it will stay above central banks’ targets across the region this year. Policymakers will probably look through this and keep interest rates on hold. In fact, we think that the Czech Republic will shift towards easing later this year as the MPC responds to falling core inflation and weak economic growth.
Liam Peach Emerging Markets Economist
Continue reading

More from Emerging Europe

Emerging Europe Economics Update

More to Polish industry resilience than meets the eye

Poland’s industrial sector as a whole has shaken off widespread materials shortages in recent months, in part due to its more diversified sectoral make-up than the rest of CEE. But it also reflects the fruits of recent investments into new production capacity in key sectors of manufacturing, which we think will continue to help Poland’s economy outperform the rest of CEE in the new few years.

2 December 2021

Emerging Europe Data Response

Russia Activity Data (Oct.)

Russia’s economy made a mixed start to Q4 as industrial production recovered while retail sales growth slowed sharply. With the country’s severe virus outbreak and low vaccine coverage set to keep virus restrictions tight for some time, we think the economy will lose steam in the coming months.

1 December 2021

Emerging Europe Data Response

Manufacturing PMIs (Nov.)

The manufacturing PMIs in November were surprisingly strong across the board, but with supply chains stretched and the emergence of the Omicron variant clouding the outlook, there are reasons to be sceptical that this strength will be sustained in the coming months.

1 December 2021

More from Liam Peach

Emerging Europe Data Response

Israel Consumer Prices (May)

The rise in inflation in Israel to 1.5% y/y in May was partly driven by food and energy, but there are some signs that underlying price pressures have increased. We think that inflation will rise further this year, but we maintain our view that this will be temporary and that interest rates will stay on hold.

15 June 2021

Emerging Europe Economics Update

Russia: consumer spending recovery has further to run

Russian household spending looks set to rebound strongly this year as “excess” savings are drawn down, credit continues to expand, government support boosts incomes, and the labour market recovers. This will keep inflation elevated for a while. But some of these factors are likely to fade next year which should cause spending growth to slow and help to bring inflation back to target.

15 June 2021

Emerging Europe Economics Weekly

Ruble gains, Hungary policy rift, stronger CEE currencies

The Russian ruble appreciated to its strongest level against the dollar since last July this week and the balance of forces now increasingly favours further gains, but a lot depends on geopolitics and all eyes will be on the outcome of the Biden-Putin summit next week. Meanwhile, the difference in opinions between Hungary’s central bank and the government about the outlook for policy further suggests that the central bank is taking the inflation fight more seriously and that the tightening cycle will start this month. Finally, we revised up our forecasts for the koruna, zloty and forint this week.

11 June 2021
↑ Back to top