CEE & CCA week ahead: Rate decisions in Hungary, Turkey and Kazakhstan
The upcoming interest rate decisions in Hungary, Turkey, and Kazakhstan are pivotal as markets anticipate potential rate cuts, particularly in Turkey, where declining inflation is fueling expectations. Per the full note , Turkey's central bank could pivot away from its current policy stance, thereby influencing regional currency dynamics. This week also sees Poland releasing key economic data, which will provide insight into its labor market and industrial production, crucial for understanding regional economic resilience. As expectations for Turkish easing grow, this may exert bearish pressure on the TRY ahead of any confirmation from Turkish officials.
What the desk is arguing
The upcoming week will be crucial for monetary policy in Central and Eastern Europe, with interest rate announcements set to impact market sentiment. The desk views the potential rate cuts in Turkey, fueled by falling inflation, as a pivotal moment for regional currencies. Per the full note , the market is increasingly betting on a Turkish rate cut amidst a backdrop of easing price pressures.
Economic data from Poland will also play a significant role, with moderate growth expected in industrial production. The labor market remains stable, yet challenges persist as certain manufacturing sectors struggle. Any signs of economic deterioration could further influence central bank decisions across the region.
Where it sits in our coverage
While we currently have no specific internal coverage available for the relevant currencies, traders should watch for shifts in tone from central bank communications in Hungary, Turkey, and Kazakhstan for broader implications across the CEE region.
How other firms see it
Currently, there is no contrasting opinion noted within our internal coverage. However, keeping an eye on how other market participants respond to these rate decisions will be essential for traders.
What the calendar says
No major scheduled events are on the calendar in the coming weeks for this jurisdiction, though market reactions to upcoming rate decisions will be key indicators to watch.
Key takeaways
- 01Turkey's potential rate cut could reshape regional currency dynamics.
- 02Poland's upcoming industrial output data will highlight manufacturing sector disparities.
- 03Stable labor market in Poland suggests limited pressure on wage growth.
- 04Market participants are closely monitoring inflation trends for further rate decision cues.
Market implications
Watch the market's reaction to Turkish rate announcements, particularly if any shift in policy guidance from the central bank occurs prior to the decision on October 21. A confirmed rate cut could see heightened volatility in the TRY.
Risks to this view
A reversal in the expected rate cuts could stem from a sudden uptick in inflation or unexpected economic data, particularly from Turkey, demonstrating that the inflation trajectory can still affect policy direction significantly.
Articles CEE & CCA week ahead: Rate decisions in Hungary, Turkey and Kazakhstan Published 11:45 Hungary Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Hungary, Turkey and Kazakhstan will announce interest rate decisions next week, while Poland releases industrial output, labour market and retail sales data Adam Antoniak , Peter Virovacz , Muhammet Mercan and Dmitry Dolgin Falling inflation has markets increasingly betting on a Turkish rate cut Poland: Industrial output and labour market data in focus September industrial output and labour market data will be released on Tuesday. Although the European and German economies show signs of recovery, Polish manufacturing remains fragile and uneven. Some sectors, including electrical equipment, machinery and equipment, and other transport equipment, are performing relatively well.
Others, such as textiles, furniture and the automotive industry, continue to struggle. With the calendar effect neutral (the number of working days is the same as a year earlier) and a high comparison base, we forecast low single-digit growth in industrial production in September. At the same time, we expect PPI inflation to accelerate further, driven mainly by higher crude oil refining costs.
Poland’s labour market remains stable. It is no longer exceptionally tight, nor showing signs of weakening. Wage growth in the enterprise sector has moderated and is stabilising at around 6.0%, no longer exerting significant pressure on price growth.
Employment continues to decline amid an ageing population and an insufficient inflow of younger workers to replace those retiring, particularly in manufacturing. Enterprise-sector data do not capture the employment of immigrant workers. Thursday brings the release of September retail sales data.
Despite some moderation, private consumption appears relatively resilient to the current energy shock and high retail fuel prices. To some extent, the impact of rising fuel prices on household finances is being cushioned by government measures temporarily reducing excise duty and VAT on fuels. Demand for durable goods remains solid, while some restraint is visible in day-to-day spending on necessities.
Given the substantial savings accumulated in previous quarters, households should be able to smooth their consumption over time. Nevertheless, household consumption growth this year is projected to be slower than in 2025. Hungary: NBH expected to keep rates unchanged The National Bank of Hungary’s watchlist is fairly limited to fiscal policy and risk sentiment.
In practice, however, it is difficult to assess these factors in the run-up to the October rate-setting meeting on Tuesday. Although inflation figures were dovish, market volatility in relation to geopolitical developments remains high. With no clear de-escalation in sight, risk sentiment won't allow the NBH to cut rates now.
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