Turkey’s Inflation Report, Russia sanctions, Polish inflation

The Turkish central bank’s optimistic inflation forecasts add weight to our view that monetary easing is likely to go too far and will ultimately have to reverse course. Elsewhere, although the rise in Polish inflation to a seven-year high in July has prompted several MPC members to adopt a more hawkish tone, we doubt that this will lead to interest rate hikes. Finally, the threat to Russia from tighter US sanctions has resurfaced this week – these would probably have a greater impact on local financial markets than the real economy.