Whilst the European Central Bank is drudging to fuel inflation in the Eurozone, consumer price growth surprised on the upside in December in Poland (up to 3.4% from 2.6% in November), Hungary (to 4.0% from 3.4%), Czechia (to 3.2% from 3.1%) and Romania (to 4.0% from 3.8%). In the latter two countries, inflation was above the upper end of the respective central bank’s target ranges for the second consecutive month while Hungary’s upper band was hit in December. Strong rises in food and fuel prices were the main trigger for the surge in inflation, boosting calls for interest rate hikes, even though the price rises may be temporary. Czechia may indeed tighten monetary policy as it did from mid-2017 to mid-2019 amid rising inflation. Romania which also hiked in 2018 may be more reluctant this time, fearing that raising rates could attract speculative capital inflows and thus further widen already imbalanced external accounts. Meanwhile Poland and Hungary – although posting the largest inflation shocks in the region in December – are likely to maintain their long lasting very low policy rates (1.5% and 0.9%, respectively).