CEE & CCA week ahead: Kazakhstan rate decision and Polish GDP
At a Glance
The upcoming week is set to provide critical economic data from Central and Eastern Europe (CEE), particularly focusing on Poland's GDP and inflation figures alongside Kazakhstan's monetary policy decision. Per the full note source, the forecast for Kazakhstan suggests a cautious 25 basis point cut to 16.50%, reflecting ongoing economic pressures in the region. In Poland, the anticipated GDP growth of 3.8% for Q2 is supported by strong investment figures but tempered by weakening private consumption, which is forecasted to grow at just 3.0%. The combination of these insights highlights a divergence in economic momentum across these economies, with distinct implications for regional currencies.
Key Takeaways
- 01Kazakhstan expected to cut rates by 25bps to 16.50% as economic pressures mount.
- 02Poland's Q2 GDP projected at 3.8%, show strong investment but weak consumption growth.
- 03The divergence in economic indicators could influence currency strategies significantly.
- 04Market sentiment is mixed, with some firms leaning towards a stronger PLN outlook.
Full Analysis
What the desk is arguing
The FX desk anticipates that both the rate decision from Kazakhstan and the economic data from Poland will have significant implications for regional currency dynamics. According to the source, the central bank in Kazakhstan is expected to tread carefully with a modest rate cut while Poland's investment boost contrasts with its slowing consumption metrics, which could impact the PLN's positioning against stronger currencies such as the EUR.
In Poland, while fixed investment is projected to rise to 8.5% YoY, private consumption being pegged lower at 3.0% YoY suggests that economic growth is not as robust as it might initially appear. This dual narrative presents a complex backdrop for currency traders as they navigate shifting growth rates and inflation dynamics in these markets.
Where it sits in our coverage
Our consensus target for the PLN against the EUR stands at 1.075, with a range of 1.04 to 1.12. Specific firms like jpmorgan are aligned with this target, pegging the rate at 1.10 for a March 2026 tenor, while bofa has a contrary stance, expecting it lower at 1.04.
The desk's analysis suggests that our stance is at the upper bound of the spread, indicating a more optimistic outlook compared to the bearish sentiment expressed by some firms.
How other firms see it
There appears to be a consensus among firms such as jpmorgan and hsbc, which anticipate stable or appreciating trends for the PLN in the medium term based on economic recovery signals. Conversely, bofa holds a more pessimistic outlook, likely influenced by concerns over decreasing consumption and potential central bank hesitancy in rate adjustments.
In the broader context, movement in EUR/USD is likely to mirror shifts in CEE dynamics, particularly following these economic data releases.
What the calendar says
With no high-impact events on the calendar in the next 30 days, traders will need to focus on the data releases from Poland and the rate decision from Kazakhstan next week as significant indicators to guide their positioning.
Market Implications
Watch for significant movements around Kazakhstan's rate decision and Poland's GDP data release. A rate cut could pressure KZT while PLN may react to shifts in investment trends versus consumption.
From the original
Articles CEE & CCA week ahead: Kazakhstan rate decision and Polish GDP Published 11:20 Hungary Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland will release second-quarter GDP and August inflation data next week, while Hungary and Turkey
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4 itemsCEE & CCA week ahead: Polish industry and labour market data, Czech producer prices in focus
This week's focus on Polish and Czech macroeconomic data is critical for gauging economic sentiment in Central and Eastern Europe, especially given the implications for monetary policy. Per the full note [source], July industrial output in Poland is expected to show steady growth driven by increasing investments, while PPI is projected to rise due to input cost pressures exacerbated by a weaker koruna. Additionally, cooling labour market dynamics could temper inflationary pressures, aligning with observed trends across the region. The consensus now emphasizes that soft labor conditions are likely to maintain a lid on broader inflation concerns, pushing back aggressive monetary tightening scenarios from the central banks involved.
Poland’s economy enters the third quarter on an uneven footing
The desk interprets recent bank commentary suggesting that Poland's economy shows signs of uneven growth entering Q3, despite a strong end to Q2. While industrial output remains robust, with a year-on-year increase of 5.1% in July, the construction sector has experienced a notable decline, which could dampen growth expectations. Per the full note from ing-think, GDP growth is projected at 3.4% for 2026, indicating a resilient outlook, albeit with potential headwinds from construction. Traders should watch for how these trends might affect the PLN in the context of regional European economic performance and monetary policy outlooks.