In Slovakia, average monthly real wage accelerated to 4.0% y/y
Today, November’s inflation will be released in the morning.
Later in the day, Poland will release trade and current account data.
Economic developments
In October, industrial production fell by 6.6% y/y in the euro area and by 5.5% y/y in the EU, while the volume of retail trade decreased by 1.2% y/y in the euro area and by 0.9% y/y in the EU, according to the latest Eurostat releases. In the CEE region, both sectors expanded in several countries. The retail trade sector (excluding the sale of motor vehicles) seems to have been the strongest in Croatia in October, as it grew by 2.8% y/y.
Poland and Romania also saw positive growth momentum. As for industrial production, October output was higher year-on-year in the Czech Republic, Croatia, Slovenia, Slovakia and Serbia. More importantly, however, October’s growth dynamics suggest an improvement compared to the third quarter. Such a development is in line with our scenario of an economic recovery in 2024.
Market developments
The CEE currencies seem to have benefited from the global developments as they strengthened against the euro on Wednesday. The Fed kept interest rates unchanged, but there are first signs that the US central bank is changing course. Today, the ECB holds a rate-setting meeting. A change in key rates is virtually out of the question, but the statement will be analyzed for signs of monetary easing.
The bond market seems to be reflecting expectations of imminent rate cuts, as long-term yields have fallen in the core markets and the region has followed suit. As for monetary policy in the region, Hungary and the Czech Republic will hold central bank meetings next week. While Hungary is expected to continue easing, the Czech central bank’s decision is open. However, Zamrazilova said that the risks of a price spiral have passed and inflation is on track to fall toward 3%. However, she remained concerned about the price jumps at the beginning of the year. However, Deputy Governor Frait said that the central bank can start easing monetary policy.
