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CBR delivers another large hike, more tightening still in the pipeline Russia’s central bank (CBR) raised its policy rate by 100bp, to 13.00%, at today’s meeting and with the ruble likely to remain under pressure and inflation pressures to keep building, …
15th September 2023
Little sign of the economy slowing Industrial production softened a touch in Turkey in July but retail sales continued its recent run of strength and adds further support to the view that the economy is not yet slowing in response to the recent policy …
12th September 2023
Inflation still some way from its peak The further rise in Russian inflation to 5.2% y/y in August is a sign that the economy is bumping up against capacity constraints and we think it will continue to increase over the coming months. The central bank …
8th September 2023
The decision by the National Bank of Poland (NBP) to kick off its easing cycle this week with a much larger-than-expected 75bp interest rate cut has been heavily criticised, and suggests to us that policymakers are underestimating the challenge of …
NBP starts it easing cycle with a bang The National Bank of Poland (NBP) kicked off its easing cycle today with a much larger-than-expected 75bp cut to its main policy rate, to 6.00%. We will firm up new interest rate forecasts after Governor Glapinski’s …
6th September 2023
Sharp falls in inflation mean that the economies of Central and Eastern Europe (CEE) are on the cusp of a broad-based monetary loosening cycle. That said, we think that the legacy of the inflation shock over the past two years will be more persistent …
5th September 2023
The Bank of Israel (BoI) left its policy rate on hold again today, at 4.75%, and while our baseline forecast is that the tightening cycle is now over, the BoI’s hawkish comments support our view that it won’t turn to interest rate cuts until Q2 next year …
4th September 2023
Inflation surge puts another large hike on the table The jump in Turkish inflation to a much stronger-than-expected 58.9% y/y last month, coming shortly after bumper Q2 GDP figures, means the central bank (CBRT) is likely to follow up last month’s 750bp …
Rising gas prices doesn’t mean energy crisis is back Wholesale European natural gas prices jumped more than 20% in the early part of this week and have been highly volatile recently, but this doesn’t mean the energy crisis in the region is coming back to …
1st September 2023
This page has been updated with additional analysis since first publication. Weak PMIs in CEE, but further evidence of Russia overheating The manufacturing PMIs for August suggest that industrial sectors in Poland, Czechia and Turkey remained in the …
Turkey’s policy shift has ticked a lot of the right boxes so far and the central bank’s large rate hike this month will go a long way to rebuilding confidence among investors. But there are still question marks about how much tightening will be delivered …
31st August 2023
Double-digit inflation will prevent September rate cut The fact that Polish inflation remained in double-digits in August, at 10.1% y/y, means that an interest rate cut at the central bank’s meeting next week now seems very unlikely. That said, we think …
This page has been updated with additional analysis since first publication . Rapid Q2 growth likely to trigger another large rate hike The bumper Turkish Q2 GDP growth figure of 3.5% q/q, taken together with more timely figures for Q3 confirms that …
This page has been updated with additional analysis since first published. Signs of softening activity at the start of Q3 The latest activity data for Russia for July suggest that retail sales maintained solid momentum while industry has come off the boil …
30th August 2023
This page has been updated with additional analysis since first publication. Sentiment rebounds, nascent recovery may be underway The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally rose in August and …
Equities in Europe, the Middle East and Africa (EMEA) have returned little in US$ terms so far this year. While they may fare better next year, we doubt they’ll outperform the wider emerging equity market. Equities in EMEA, although marginally ahead of …
29th August 2023
This page has been updated with additional analysis since first publication. MNB cuts rates again, but a short pause in the easing cycle may be coming The Hungarian central bank (MNB) announced another 100bp cut to its quick deposit rate (the key policy …
CBRT policy shift now firmly back on track There’s a lot of confusion about what drove Turkey’s central bank to deliver an unexpected 750bp rate hike this week and doubts remain about the policy U-turn. But at this point we’re minded to focus on the …
25th August 2023
CBRT delivers a shock interest rate hike The Turkish central bank’s much larger-than-expected 750bp interest rate hike, to 25.00%, at today’s meeting will go a long way towards reassuring investors that the shift back to policy orthodoxy is on track. The …
24th August 2023
Russia, Turkey and Israel had a strong first half to the year, but growth across Central and Eastern Europe (CEE) remained depressed and we don’t expect a meaningful recovery until 2024. Inflation pressures are building in Russia and Turkey on the back of …
22nd August 2023
This page has been updated with additional analysis since first publication. Economy lacked momentum in July Poland’s industrial production and retail sales figures for July came in weaker than expected and suggest that the downturn in the economy …
Russia’s macro foundations now being shaken Macroeconomic stability risks started to crystallise in Russia this week. The ruble slumped and the central bank intervened with an emergency interest rate hike. Policymakers are clearly considering further …
18th August 2023
Exceptionally high inflation in the major economies of Central and Eastern Europe (CEE) relative to elsewhere has left their currencies overvalued against the US dollar and on a trade-weighted basis in our view. We think there is scope for these …
16th August 2023
Israel's economy maintains a steady pace of growth The small pick-up in Israeli GDP growth to 3.0% q/q annualised in Q2 shows that the economy is holding up better than we and most other had thought this year. And we think that growth will remain solid …
Clouds lifting over CEE, but only slowly Q2 GDP figures for Central and Eastern Europe (CEE) generally came in below expectations and suggest that the region continued to suffer the ill-effects from high inflation and interest rates last quarter. While …
The decision by Russia’s central bank to increase its policy rate by 350bp, to 12.00%, at an unscheduled meeting today underscores the challenges that policymakers are now facing to maintain macroeconomic stability in an economy that is being distorted by …
15th August 2023
Russia’s central bank steps up to the plate, but more needed to stop ruble’s fall The Russian central bank’s 350bp interest rate hike, to 12.0%, at today’s unscheduled meeting is likely to be followed by further increases in the coming months. But there’s …
This page has been updated with additional analysis since first publication . A strong recovery, but Russia’s economic vulnerabilities are increasing The better than expected pick-up in Russia’s GDP growth in Q2, to 4.9% y/y, confirms that the economy had …
11th August 2023
Further CEE disinflation keeps rate cuts on track The July inflation data out of Central and Eastern Europe (CEE) this week suggests that our forecasts for interest rate cuts to arrive across the region over the rest of this year, and in early 2024, …
Inflation pressures picking up, tightening cycle has only just begun The jump in Russian inflation to 4.3% y/y in July provides firmer evidence that the recent build-up of inflation pressures, including from the weakening of the ruble, are now showing up …
9th August 2023
This page has been updated with additional analysis since first publication. NBR to stand pat until early 2024 The National Bank of Romania (NBR) left its main policy rate on hold again today, at 7.00%, and we think that it will continue to leave rates …
7th August 2023
Economies in Central and Eastern Europe (CEE) have experienced large and persistent net migration outflows in recent decades, but the tide has shifted in the past five years or so as outflows have dropped sharply. This is likely to continue, with net …
CEE easing cycles around the corner Expectations for the start of monetary easing cycles in Poland and Czechia were strengthened this week after the publication of weaker-than-expected Polish inflation figures for July and the shift in language at the …
4th August 2023
This page has been updated with additional analysis since the post-meeting statement and press conference. CNB on the edge of a policy shift The Czech National Bank (CNB) left its main policy rate on hold at 7.00% today, but the post-meeting …
3rd August 2023
Lira depreciation feeding through more strongly The jump in Turkish inflation in July to 47.8% y/y is likely to be followed by further rises in the coming months as the recent sharp fall in the lira and hikes to VAT continue to feed through. The central …
Strong Q2, but signs of softening industrial activity Russia’s economy is likely to have had a very strong second quarter as industrial production and retail sales rose sharply in Q2 (both by more than 3.0% q/q). But the activity data for June suggest …
2nd August 2023
CEE industry continues to struggle, price pressures diverge The manufacturing PMIs for July suggest that industrial sectors generally struggled across the region at the start of Q3, and support our view that economic recoveries in CEE are not about to …
1st August 2023
Disinflation continues, October rate cut now in play The larger-than-expected fall in Polish inflation, from 11.5% y/y in June to 10.8% y/y in July, is likely to fuel calls at the central bank for the start of an easing cycle very soon. It still looks …
31st July 2023
Recession over, but recovery likely to be weak The 0.1% q/q expansion in Czech GDP in Q2 took the economy out of technical recession last quarter, but we expect the recovery over the coming quarters to be weak. With inflation likely to continue falling …
Erkan delivers, but lingering doubts remain All eyes were on Turkey’s central bank governor on Thursday and she delivered a convincing message during the Inflation Report briefing. The priority is clearly for a more rounded policy shift than one that …
28th July 2023
Sentiment improves, but is still depressed The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally ticked up in July, but our regional measure still points to weak GDP growth at the start of Q3. Economic …
Russia and Turkey have had a strong first half of the year, but growth across Central and Eastern Europe (CEE) remains depressed and we don’t expect a meaningful recovery until 2024. While inflation pressures are building in Russia and Turkey and further …
26th July 2023
The Israeli government’s decision to press ahead with its controversial judicial reforms won’t necessarily cause foreign investment into Israel to dry up, but the direction of policymaking threatens to push the economy onto a permanently lower growth …
25th July 2023
This page has been updated with additional analysis since first publication. MNB may pause or slow its easing cycle after September Hungary’s central bank (MNB) announced another 100bp cut to its one-day quick deposit rate (the key policy rate at the …
Russian FinMin throwing in the towel? A raft of comments from senior policymakers at the Russian Ministry of Finance this week highlight the pressures that the public finances are under and how policymakers are likely to tighten fiscal policy in response …
21st July 2023
Inflation worries trigger bumper hike The much larger-than-expected 100bp interest rate hike (to 8.50%) by the Russian central bank underscores policymakers’ concerns about inflation risks. And while we don’t think monetary tightening will continue quite …
This page has been updated with additional analysis since first publication. Resilience in June, but Q2 was still weak June’s retail sales and industrial production data out of Poland suggest that the economy held up relatively well last month, but we …
CBRT underwhelms again, risks to the lira build The 250bp interest rate hike, to 17.50%, by Turkey’s central bank today once again underwhelmed expectations and the slow and steady tightening is pushing the limits on what policymakers can get away with . …
20th July 2023
May data underscore Turkey’s vulnerabilities The raft of Turkish activity and balance of payments data for May published this week highlighted the precarious nature the economy was in prior to the shift back to orthodox economic policymaking. The …
14th July 2023
