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Israel-Gaza conflict, CEE inflation spike

The experience of the conflict between Israel and Hamas in 2014 suggests that the economic impact of the current conflict may be limited and temporary. So long as it ends soon, we still expect a strong recovery over the coming quarters. Meanwhile, inflation data out of Central and Eastern Europe this week showed headline rates spiking above central banks’ targets. While we expect inflation to fall back, the risks to our forecasts over the coming months lie firmly to the upside.

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