Estonia, which won the European Commission’s backing to become the euro’s 17th member in January, must push through deeper wage cuts to remain competitive or risk seeing its external debt level rise, Capital Economics said.
Poland’s central bank will probably reject a motion to raise interest rates for a third straight month as Governor Marek Belka ’s warnings that capital inflows may undermine economic growth outweigh concern about inflation.
Hungary’s central bank may stop raising interest rates as Prime Minister Viktor Orban gets ready to appoint board members more likely to support looser policy, said economists at RBC Capital, Citigroup Inc. and Capital Economics.
The economies of Estonia, Latvia and Lithuania are recovering from the European Union’s deepest recessions faster than previously estimated as manufacturing picks up and the financial industry improves, Capital Economics said.
Hungary’s new government, which has called on the central bank’s leadership to quit, should give up its “attacks” which are “dangerous” and “prone to fail,” Magyar Nemzeti Bank President Andras Simor said.