MNB resumes easing, CNB minutes, Russian industry

The sharp downgrade in the Hungarian central bank’s inflation forecasts suggest that the door is wide open for interest rate cuts. We think inflation won’t be as soft as the central bank projects, but we still anticipate at least 75bp of rate cuts (to 5.25%) by year end. In contrast, while the minutes to the Czech central bank’s latest meeting didn’t rule out the possibility that last week’s rate hike was a one-off, the balance of probabilities is tilted towards further tightening. Finally, the decline in Russian industrial production last month reinforces our view that the economy will do little more than stagnate this year.