Polish Prime Minister Donald Tusk’s show of support for the central bank governor ensnared in a tape-recording scandal risks delaying any interest-rate cuts that could boost his chances of re-election next year.
Goldman Sachs Group Inc. said Hungarian Prime Minister Viktor Orban’s re-election means “unpredictable” policies that risk weighing on growth, as the nation’s bonds suffer East Europe’s worst returns after Russia.
Hungary will probably leave its benchmark interest rate unchanged today for a fifth month as the government’s commitment to fiscal rigor helped curbed risk costs, reducing the likelihood of a rate hike.
The Turkish lira, which trailed emerging market currencies from the Brazilian real to the Russian ruble last year, is attracting bullish recommendations after first-quarter economic growth approached that of China.
Hungary must cut spending because a plan to impose temporary taxes and retain pension-fund savings will fail to control the fiscal deficit from 2013 and risk long- term funding, Morgan Stanley and UniCredit SpA said.