Communications from central banks in the region suggest that the uncertainty from the Iran war will prompt them to stand pat for the time being, but strong underlying price pressures mean that policymakers in Central Europe and Turkey will probably be more likely to raise interest rates than elsewhere in the emerging world if the energy price spike intensifies. Elsewhere, growing concerns that Hungary’s PM Viktor Orbán might try to prevent the opposition from taking power if they win next month’s election underscore the scale of the challenge facing any new government to improve Hungary’s institutional framework.
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