The new Polish government (which marks its 100 day milestone today) has successfully unblocked EU funds and delivered a wave of optimism that has helped Poland's financial markets outperform those in other EMs. The government's loose fiscal stance will support the near-term growth outlook, but we've become more convinced that the central bank won't deliver any interest rate cuts until well into 2025. Elsewhere, the surprise decision by Turkey’s central bank to hike its policy rate this week will give investors further confidence that policymakers are now free from political pressures, although going forward we think that authorities will need to make a concerted effort to tighten fiscal policy to help rebalance the economy.
Note: We’ll be discussing where to spot financial risk in emerging markets in a Drop-In on Wednesday, 27th March. Register here for the 20-minute online briefing.
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