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ING's Frantisek Taborsky notes that Central and Eastern European central banks are adopting a cautious stance amid elevated energy prices linked to Gulf-related disruptions. Despite ongoing inflationary pressures, regional monetary authorities view the energy shock as temporary and supply-driven, opting to delay policy rate hikes. This approach reflects a broader strategy to avoid premature tightening that could stifle economic recovery. For forex markets, this signals potential stability in regional monetary policy, reducing the likelihood of aggressive rate hikes in the near term. Traders should monitor energy price volatility and any shifts in central bank rhetoric, as these could influence currency valuations. The decision to hold rates also highlights the challenge of balancing inflation control with growth support in energy-dependent economies. Looking ahead, investors should watch for signs of prolonged energy shocks or inflationary pressures that might force central banks to reconsider their stance. The focus will remain on Gulf-related developments and their spillover effects on European economies. Key assets to track include EUR/USD and regional equity markets, as policy inaction could impact capital flows and investor sentiment.
