CEE: Central banks take on a hawkish stance – ING

The National Bank of Poland (NBP) left rates unchanged at 5.75% on Wednesday. The accompanying NPB statement did not bring much fresh news. Although, it probably shows a slightly less dovish tone than in November, ING’s FX analyst Chris Turner notes.

FX to be supported by hawkish central banks

“As we discussed in our FX Daily yesterday, given market pricing, today's NBP press conference may be neutral or slightly hawkish in our view compared to market expectations. After yesterday's statement, rates sold off by roughly 5-7bp, supporting a stronger PLN. EUR/PLN quickly reached yesterday's 4.280 level and we believe the press conference may add further support to PLN, on the other hand, current valuations seem stretched at current levels.”

“In the Czech Republic, wage growth surprised to the upside yesterday and significantly exceeded the Czech National Bank forecast. Also in line with our expectations, the CNB Governor delivered a hawkish message and hinted that a pause in the cutting cycle is near and may be for a longer period.”

“Our economist's forecast of a pause in the cutting cycle in December and February is becoming very likely, which was also reflected in EUR/CZK moving below 25.200. Here we see some room for CZK to strengthen towards 25.100, and similar to PLN we see more tactical gains here.”