Delta fears, Hungary-EU spat, more NBU tightening

Concerns have grown over the past week about the spread of the Delta variant of COVID-19 but high vaccine coverage across much of the region has reduced the risk that policymakers will be forced to reimpose harsh restrictions on activity. Meanwhile, Hungary’s latest spat with the European Commission over the rule of law raises the possibility of delays to EU fund inflows. Finally, Ukraine's central bank delivered a surprise rate hike this week and its communications signalled that further monetary tightening lies in store.
Jason Tuvey Senior Emerging Markets Economist
Continue reading

More from Emerging Europe

Emerging Europe Economics Weekly

Surging virus cases and the re-imposition of lockdowns

A renewed wave of COVID-19 cases has prompted some governments to reimpose strict containment measures across Emerging Europe and talk of lockdowns is now becoming more widespread. The experience so far during the pandemic is that tighter containment measures need not result in a large hit to activity. But the latest virus waves add to the growing near-term headwinds in the region from rising inflation and supply disruptions to industry and we think that recoveries will slow sharply in Q4.

22 October 2021

Emerging Europe Economics Update

CBR accelerates its tightening cycle again

Russia’s central bank (CBR) stepped up the pace of its tightening cycle again at today’s meeting with a larger-than-expected 75bp interest rate hike, to 7.50%, and the hawkish tone of the accompanying communications suggest that further tightening will be needed. We think the policy rate will be hiked to 8.25% by year-end and remain higher than most expect throughout 2022.

22 October 2021

Emerging Europe Economics Update

CBRT now playing with fire after aggressive rate cut

Any remaining confidence in the credibility of Turkey’s central bank (CBRT) was shattered after today’s larger-than-expected 200bp interest rate cut, to 16.00%. The lira hit a fresh record low against the dollar and we think that it will continue to weaken as President Erdogan piles on the pressure for further easing. The risk of another balance of payments crisis akin to that in 2018 will continue to grow.

21 October 2021

More from Jason Tuvey

Middle East Economics Weekly

Delta variant poses biggest threat to non-Gulf economies

Concerns about the Delta variant of COVID-19 have grown over the past week but high vaccine coverage in the Gulf means that policymakers are unlikely to resort to harsh containment measures. Other parts of the region are more susceptible, adding to the reasons to think that recoveries there will lag behind in the coming years.

22 July 2021

Africa Economics Weekly

South Africa after the unrest

There are signs that the worst of the violence and unrest that has gripped South Africa this week may be over. Any hit to economic activity is unlikely to be long-lasting but the risk that the government’s austerity plans are watered down has increased.

16 July 2021

Emerging Europe Economics Update

CBRT in no rush to lower interest rates

Turkey’s central bank (CBRT) left interest rates on hold at 19.00% today and, with inflation set to rise further in July from a two-year high last month and the economy bouncing back quickly from the three-week lockdown in May, we think that an easing cycle is unlikely to begin until late this year.

14 July 2021
↑ Back to top