• According to expectations European Central Bank increased its interest rates by 25bps. Prime reference rate is now at 4.00%. Also, ECB indicated that rates would go further up. • State budget proposal for next year counts with deficit lowering to CZK 76bn, according to Deputy Minister of Finance Eduard Janota. Number includes assumption of reform package approval. • According to WIIW Institute, volume of direct foreign investments in central, eastern and south-east Europe increased by more than one third. Also, more and more investments are heading further east, to Russia and the Balkans. • Hungarian industrial production increased by 10.6% y/y in April which is more than expected 8%. • US government decreased its GDP growth estimate for this year to 2.3% from previous 2.9%. On the other hand, after weak 1Q07 economy should accelerate until the end of this year.