A Russian sovereign default moved a step closer this week, although in practice it’s unlikely to have a major impact on the economy. In the meantime, high oil and gas revenues have given the authorities room to row back on the emergency measures put in place in February and we expect further interest rate cuts. Elsewhere, the Hungarian government’s plan to rein in its budget deficit will weigh on growth over the next couple of years. Finally, although the incoming governor of the Czech central bank Aleš Michl made dovish comments this week, the rest of the board remains hawkish and we still expect further interest rate hikes.
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