CEE more vulnerable to exchange-rate shocks
Czech Republic, Hungary and Poland show higher exchange-rate pass-through than developed countries, new research from the National Bank of Hungary posits.
The analysis shows that the difference can be explained by the credibility of monetary policy and the average inflation rate. The research also finds that it is almost impossible for the interest-rate policy to smooth the exchange rate with the aim of minimising inflationary impact. However, low inflation can reduce the exchange-rate pass
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