Reports this week suggest the US has made the offer of security guarantees for Ukraine conditional on territorial concessions to Russia. The macro implications will depend on how credible those security guarantees are: any peace deal which emboldens Russia could limit the amount of capital that Western partners are willing to commit to Ukraine’s reconstruction and accelerate plans to raise defence spending across Eastern Europe. Meanwhile, the latest communications from central banks in the region suggest that the risks to our interest rate forecasts have shifted to the downside at the start of 2026.
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