Russia’s fuel squeeze raises the cost of war

Ukraine’s drone campaign against Russian energy infrastructure is becoming a more sustained macroeconomic problem for Moscow. The disruption to refineries is squeezing fuel supply, adding to inflationary and fiscal pressures, and raising the economic cost of the war. But while these attacks make the war more visible inside Russia and add to pressure on the economy, they are unlikely on their own to push Putin towards compromise. Elsewhere, we think the door could be open for Hungary's central bank to deliver an interest rate cut as large as 50bp at its meeting next week.