Erdogan at the wheel, inflation eases in CEE

Developments in Turkey over the past week highlight that all levers of economic policy have effectively been centralised in the hands of one man – President Recep Tayyip Erdogan. The reaction in financial markets has been smaller than might have been expected. But the downside risks for Turkish assets and the economy are mounting. Meanwhile, data released this week showed that inflation fell in Central and Eastern Europe in June. But we doubt that this will shift the balance on MPCs away from rate hikes this year.