CEE FX: Inflation and policy signals reshape regional moves – Societe Generale

Societe Generale notes that CEE FX is being shaped by diverging inflation and policy signals across the region. Polish inflation’s return to the NBP target has strengthened the case for a final 25 basis point rate cut this year, while EUR/CZK is retracing after CNB Deputy Governor Eva Zamrazilova said June’s rate hike was pre-emptive and one-off. In Hungary, EUR/HUF reversed lower as Prime Minister Peter Magyar said the country could meet euro adoption criteria by 2030.

Polish inflation return boosts easing odds

"EUR/HUF reversed lower after testing the 50dma at 356.91 after PM Magyar said Hungary could meet the EU economic criteria for euro adoption by 2030 despite projections for the deficit to widening above 7% this year."

"Meeting the criteria could bolster business, investor and consumer confidence, but euro adoption would remain a separate political decision requiring public consultation."

"In Poland, inflation unexpectedly returned to the NBP target of 2.5% in June. This increases the likelihood of a final 25bp rate cut this year rather than next year. EUR/PLN briefly rallied above 4.30."

"EUR/CZK retracing below 24.20. CNB deputy governor Zamrazilova reiterated that the rate increase last month was pre-emptive and a one-off. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)