Turkey’s CA deficit, sticky inflation in Hungary

Current account figures out of Turkey this week were a bit worse than expected but the underlying trend suggests that the economy is rebalancing. This, alongside a further interest rate hike by the central bank next week, should provide a more supportive environment for the lira. Meanwhile, inflation figures released out of Central Europe showed that underlying price pressures have eased more quickly in Czechia than in Hungary so far this year. With the forint close to its all-time low of 370/€, stubbornly high inflation will concern the Hungarian central bank and suggests that the risks are increasingly skewed to higher short-term interest rates.