Hungary and Slovakia will be affected more than most if the Trump administration’s announcement of a 25% auto import tariff isn’t reversed. Elsewhere, efforts to secure a Russia-Ukraine ceasefire in the Black Sea show that Russia is playing hardball in talks and also that the EU is extremely reluctant to lift sanctions on Russia. Finally, the large deficit projected in Israel’s 2025 budget underscores the fiscal challenge from the war in Gaza. The BoI is clearly concerned and the risks to our interest rate forecast, which until recently had been on the hawkish side, lie to the upside.
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