Russia food prices, Czech tax cut, Turkey’s policy shift

Measures taken by Russia’s government this week to try to curb the rise in food inflation are unlikely to have a major impact on monetary policy, but they do underline that higher social spending is likely to be a permanent feature of Russian fiscal policy going forward. Meanwhile, a proposed income tax cut in the Czech Republic may prompt the central bank to raise interest rates sooner than we currently expect. Finally, there were further encouraging signs from Turkey’s central bank that the shift towards orthodoxy is here to stay. This is likely to be reinforced with a further rate hike next week.