Guidance from Hungary's central bank this week suggests that it is taking the fight against inflation much more seriously and we now think that a monetary tightening cycle will start over the coming months. This should support the forint, but there are question marks about whether there is appetite at the central bank to move away from deeply negative real interest rates. Meanwhile, Turkey's budget balance has improved significantly in recent months, largely thanks to strong tax collection and spending restraint. But if the central bank struggles to lower interest rates, we suspect that fiscal loosening will be back on the cards.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services