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Fed and ECB will ease Central European policy dilemmas

Monday, June 24, 2019


Impact of global policy shifts on monetary policy in Central Europe.


The dramatic decline in euro-area government bond yields has helped push down yields across Central Europe, with bond markets now pricing in interest rate cuts in the Czech Republic, only a month after the Czech National Bank (CNB) increased borrowing costs to 2%. However, the scope for monetary stimulus in Central Europe is limited, thanks to inflationary pressures.


  • MSCI’s index for Polish, Hungarian and Czech equities is rising, despite a slight loss for the broader emerging market index.
  • Government bonds are rallying sharply in both developed and developing economies as ten-year US Treasury bonds fall.
  • The Brent crude international oil benchmark has reached 65 dollars/barrel thanks to escalating US-Iranian tensions and dollar weakness.

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