CEE & CCA week ahead: Central bank decisions and inflation data in focus
The National Bank of Poland is expected to maintain its benchmark interest rate at 3.75%, despite dovish signals from Governor Adam Glapiński, reflecting continued uncertainty in inflation trajectories and economic conditions across Central and Eastern Europe. Per the full note , while recent inflation print increases have raised pressures, the central bank appears more aligned with sustaining current policy rather than easing. Concurrently, Hungary is poised to release inflation data that may show upward pressure due to recent fuel price hikes, which could be pivotal for monetary policy discussions in the region.
What the desk is arguing
The desk positions that the NBP will keep rates steady, framing this as a defensive stance against evolving inflation narratives and economic signals within the region. Per the source, Governor Glapiński's dovish rhetoric contrasts with broader Monetary Policy Council views, suggesting a split in perspectives on easing.
Supporting this outlook, inflation in Poland is nearing the upper bounds of the central bank's acceptable range, reinforcing the decision to remain at 3.75% for the foreseeable future. The research notes significant developments expected from Hungary, where inflation is set to rebound, highlighting the interplay between energy prices and central bank actions.
Competing forecasts hint that significant surprises in either inflation or economic activity could prompt NBP shifts sooner than anticipated, though such alternative scenarios are currently deemed less likely.
How firms align with this view
Key takeaways
- 01Poland's NBP likely to hold rates at 3.75% amid inflation concerns.
- 02Hungary may see inflation rise, influenced by recent fuel price increases.
- 03Insufficient economic recovery could lead to reconsideration of policy stances across CEE region.
Market implications
Traders should focus on the upcoming inflation release from Hungary, which will likely influence both regional sentiment and currency positioning. A stronger-than-expected inflation print could drive further volatility in the Polish zloty and Hungarian forint, particularly if it steers central bank expectations.
Risks to this view
A significant uptick in inflation exceeding forecasts could prompt the NBP to reconsider its policy stance, negating the current hold view. Additionally, unforeseen shocks in global economic conditions or energy prices could also lead to rapid shifts in central bank policy in both Poland and Hungary.
Articles CEE & CCA week ahead: Central bank decisions and inflation data in focus Published 11:02 Czech Republic Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland and Turkey will announce monetary policy decisions next week, while Hungary and the Czech Republic will release key inflation and activity data Adam Antoniak , Peter Virovacz , David Havrlant and Muhammet Mercan We expect the National Bank of Poland to keep rates on hold next week despite recent dovish comments from Governor Adam Glapiński Poland: NBP set to stay on hold despite governor's dovish tone While National Bank of Poland Governor Adam Glapiński was surprisingly dovish at the July press conference – even raising the suggestion of a rate cut after the summer holiday – the rest of the Monetary Policy Council was more cautious about the room for monetary easing. Given uncertainties regarding the inflation outlook and the fact that, according to the August flash estimate, it rose towards the upper bound of acceptable deviations from the central bank target, we expect the main policy rate to remain unchanged at 3.75% not only this Wednesday but also for the rest of the year. Hungary: Inflation set to pick up after months of disinflation Following a disappointing performance in June, we expect a rebound in industrial production in Monday's release, which is in line with the jigsaw pattern of monthly performance that has recently emerged.
A good start to the third quarter will be crucial for avoiding a quarterly drop in GDP, as the heatwave and the related energy crisis will definitely bring a significant decrease in industrial production volumes in August due to voluntary production reduction. Tuesday brings the release of August inflation. The latest increase in fuel prices will not go unnoticed this time, as the government phased out price caps in late June and the timing of data collection was favourable in July.
We estimate that fuel prices will add roughly 0.10-0.15ppt to the monthly inflation rate in August. Additionally, the weakening of the forint since mid-June may also have an impact, primarily on processed food and durables. However, some seasonal factors will counterbalance this, with an expected 0.2% monthly inflation reading pushing up the headline figure after months of disinflation.
In our view, the 1.4% figure itself won’t make the Monetary Council stop cutting interest rates. Still, rising yields, higher energy prices and a weaker HUF make the picture more complex. Czech Republic: Industrial strength and inflation details in focus Industrial output growth likely remained robust in July, as the Czech industrial base has found solid ground and is propelled by a solid inflow of new orders.
The trade balance is set to have flipped into a slight deficit in the same month. The unemployment rate is expected to have remained unchanged in August despite the renewed hiring in manufacturing, as it will take a bit of time before it gains tangible strength. The August headline inflation reading is set to be confirmed in the refined release, while the focus will be on imputed rents and regulated energy prices, which we expect to have firmed up.
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