Hungary’s hawkish shift, Turkey goes to the polls

The more hawkish communications from Hungary’s MPC this week support our long-held view that ultra-loose monetary policy will be reined in this year. The hawkish shift caused market expectations for interest rates to rise sharply, although we still think that there will be more tightening than markets are currently pricing in. Meanwhile, a victory for President Erdogan and the AK party in Sunday’s Turkish elections would add to reasons to think that the long-term outlook will be marked by slower growth, higher inflation and a weaker currency. This is the first edition of a new Emerging Europe Economics Weekly publication that is being added to your subscription.