Today’s calendar in CEE does not have much to offer after the meetings of the National Bank of Hungary and the Czech National Bank over the past few days. Next week, we should again get more local stories with Polish inflation as the highlight. Yesterday, we heard from another MPC member, Ireneusz Dabrowski, that the National Bank of Poland is ready to cut rates, but it will be a cautious process. We believe that we will see one more rate cut this year at the October or November meeting, depending on next week’s inflation figures.
In the Czech Republic, we also had the opportunity to hear from Deputy Governor Eva Zamrazilova yesterday, who expanded on the governor’s press conference after Wednesday’s decision to leave rates unchanged. Clearly, the main inflationary problem for the CNB is wage growth and the price of services, including housing. Although negotiations with unions on wage growth for state employees are not progressing, the CNB sees wage growth heading above forecast, which, according to the deputy governor, is creating further inflationary pressures.
FX remains relatively stable, but we still see signs of global pressure to weaken. The continuation of the USD rally is clearly negative news for the CEE complex in general, which may threaten heavy long positioning, especially in the HUF market. Given the absence of local news today, global factors will remain the main driver.
Frantisek Taborsky