CEE: NBP to leave rates unchanged as inflation in Turkey continues to fall – ING

The CEE region will become interesting again after a few rather quiet weeks. Today we will see PMIs in the region still confirming the pessimism in the industry. Tomorrow the Czech Republic will release second quarter wages where we expect a slight decline from 7.0% to 6.8% YoY in nominal terms, below Czech National Bank (CNB) expectations, ING’s FX strategist Frantisek Taborsky notes.

CEE FX seems fairly priced

“In Turkey, August inflation continues to fall from 61.8% to 51.9% YoY, according to our estimates, and in Hungary we will see the 2Q24 GDP breakdown. On Wednesday, we expect the National Bank of Poland to leave rates unchanged at 5.75% in line with market expectations. Thursday as usual will be followed by the National Bank of Poland governor's press conference. On Friday, the Czech Republic and Hungary will release industrial production for July and Romania's second quarter GDP breakdown.”

“Several speakers are also scheduled this week. On Thursday in Hungary, the finance minister and the central bank governor will speak at a local conference. Also in Hungary, there is a meeting of EU ministers in the second half of the week to discuss cohesion policy and EU money.”

“CEE FX seems fairly priced to us at the moment. On the negative side, EUR/USD has been going down in recent days which has not yet fully translated into CEE FX. On the other side, rate differentials remain the highest in several weeks which should keep CEE FX at stronger levels. Overall, we are slightly bullish on the CZK, which has been gradually heading below 25.00 EUR/CZK for the last few days, which has been our view for a long time. We are also slightly bullish on PLN, which is recovering from a quick sell-off last week. On the other hand, the HUF potential is hitting a ceiling in our view and we are more likely to see a EUR/HUF reversal to the upside here.”