Hawkish Fed adds to growing external risks

The 75bp interest rate hike by the US Fed this week and expectations for further large hikes in the coming months will have ripple effects across the region. It is likely that Hungary's central bank will be forced to raise rates to defend the forint again and we now expect the Turkish lira to end the year at 24/$. Elsewhere, the risk that gas flows from Russia to Europe are cut off has increased. The gas deal agreed between the EU, Egypt and Israel this week will boost Israel's exports, but it's likely to take many years before Israel becomes a major gas exporter. World with Higher Rates - Drop-In (21^st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now