The Turkish lira has recovered lost ground since Monday, although policymakers have only done the bare minimum in response to the crisis. There have been some positive noises on fiscal policy, yet there is no sign that the central bank will raise interest rates significantly. Relations with the US remain poor and further sanctions may be in the offing. Elsewhere, Russia’s President Putin has faced another backlash against plans to tighten fiscal policy, adding to our impression that – despite hawkish rhetoric – the fiscal stance will become more accommodative.
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