Deflation Rings Wake-Up Call to East Europe Central Banks

Central banks across the European Union’s eastern countries are overcoming their aversion to chasing deflation with monetary easing, and investors are betting that the new rate-cut cycles are just getting under way.

Poland, where prices have been falling since July, ended a five-month pause with an interest-rate cut this month. Hungary on March 24 lowered its benchmark after a seven-month interlude, following deflation in nine of the last 11 months. Czech policy makers are weighing whether to weaken the koruna and Romania’s central bank is forecast to cut rates Tuesday.