Russia’s macro pressures, external conditions tighten

Macroeconomic stability risks started to crystallise in Russia this week as the ruble slumped and the central bank intervened with an emergency rate hike. Policymakers are considering further measures, including capital controls, but it's hard to see stability in the economy until the current account position improves. Meanwhile, tighter external financing conditions are in closer focus as US Treasury yields hit fresh multi-year highs this week. Vulnerabilities across Central and Eastern Europe have declined this year, but we think that currencies will fall in coming months and that there's a risk central banks act more cautiously in easing monetary policy than we expect.