Pace of monetary easing will slow in Eastern Europe

Significance Central banks in Central-Eastern Europe (CEE) have already delivered hefty rate cuts but the ECB move might not herald further loosening. Economic recovery is tepid but inflation is rising and political pressures on central banks are increasing. The diverging monetary policies of the ECB and the US Federal Reserve (Fed) are a further complication. Impacts The Polish central bank is unlikely to cut rates until 2025, while the Czech and Hungarian central banks could slow their rate-cutting pace. The Polish central bank governor may be put on trial for alleged constitutional violations, possibly losing his seat on the ECB’s board. Hungary’s government is likely later this year to table a law that could increase its oversight of the central bank.