This week is quite eventful in CEE. Two central bank meetings are scheduled in the region. In Poland, the rate-setting meeting is on Wednesday, and in Serbia it is on Thursday. We do not expect any change in the key rates in either country.
Apart from the central bank meetings, Slovakia and Romania will publish the 3Q23 GDP structure. Czech Republic, Hungary, Romania and Slovakia will publish retail sales growth for October. Hungary and the Czech Republic will also release industrial production growth. At the end of the week, Hungary will release November inflation, which is expected to continue its dynamic decline.
The PPI index will be released in several countries during the week and is expected to confirm the ongoing disinflationary tendencies in the CEE economies. Last but not least, the Czech Republic will release wage growth in the third quarter and the data may prove to be very important ahead of the central bank’s December meeting, as the decision on when to start easing monetary policy is still pending.
FX market developments
The CEE currencies maintained their relative strength against the euro last week. The Czech koruna and the Polish zloty performed particularly well, extending their gains. This development has been driven by global trends, as expectations of interest rate cuts by major central banks next year are growing amid falling inflation and easing demand pressures. This week, the Polish and Serbian central banks are the key local events.
We expect both banks to remain on hold in December. While the Polish central bank is taking a pause in its easing cycle, Serbia has yet to see monetary easing, which we expect to start in the course of the first quarter. Otherwise, nominal wage growth in the Czech Republic (due on Monday) could trigger comments from central bankers, as the start of monetary policy is likely to be discussed at the December meeting. Recent data has been clearly anti-inflationary (final 3Q23 GDP was revised down amid falling inflation and expected fiscal tightening in 2024).
