Tariff concerns and ongoing Russia-Ukraine negotiations are casting a shadow over economic prospects in Central and Eastern Europe (CEE), as nations brace for the release of the Federal Reserve's Minutes. In this complex landscape, Erste Bank Sparkassen (CR) and its affiliates have stated that they do not take responsibility for the accuracy or completeness of the information provided. The inflation and interest rate outlook for the region has been revised, with a forecasted increase in inflation expected by 2025.
In most CEE countries, there is limited room for monetary easing throughout 2025. Poland and Serbia are anticipated to delay monetary easing, whereas Hungary is projected to implement less extensive rate cuts. Hungary faces additional pressure to adhere to its mid-term fiscal plan, which has been approved by the European Union, in order to resolve its excessive deficit situation by the next year.
Global factors are currently supporting CEE currencies, with market focus shifting towards mid-tier US data and the forthcoming FOMC Minutes. Michele Bullock from the Reserve Bank of Australia noted that higher interest rates have been functioning as expected, contributing to a slowdown in economic activity and curbing inflation. However, Bullock emphasized that the first rate cut since 2020 does not signal the beginning of a series of rate reductions.
Fed rate cut bets are providing support to the XAU/USD pair, while market participants remain cautious about potential developments. The recovery trajectory for several CEE countries is not expected to be as robust as initially predicted towards the end of 2024, prompting a downward revision in the full-year growth forecast. Yet, the outlook for 2025 reveals an acceleration in GDP growth across all CEE countries, except Croatia and Slovakia.
The Maker (MKR) cryptocurrency has also shown significant movement, extending its gains by 6% to trade around $1,189 as of Wednesday. According to Artemis data, MKR achieved a new yearly high in daily revenue on February 10, generating $10 million.