Following a relatively quiet week in CEE, the upcoming days are also expected to be light in terms of data releases. However, Monday will be busy for Poland, as the national statistical office is scheduled to publish figures for industrial production, PPI, and wages for May. On Tuesday, 24 June, Poland will release retail sales data for the same month. Additionally, the Hungarian central bank will convene for a monetary policy meeting, where no changes to interest rates are anticipated. Wednesday will feature another central bank meeting, this time in Czechia. We expect policy rates to remain unchanged, primarily due to persistently high inflation in several household consumption-related sectors. Labor market data will also be released midweek, including unemployment figures from Poland and wage growth statistics from Serbia. On Thursday, Croatia will publish its current account balance, while Slovakia is set to release its PPI data. The week will conclude on Friday with the publication of Hungary’s unemployment rate and Slovenia’s retail sales figures.
FX market developments
The FX market has remained relatively stable, with only marginal depreciation observed in the Hungarian forint and the Polish zloty. In Poland, several policymakers, including Masłowska and Kochalski, have expressed skepticism regarding the likelihood of interest rate cuts in July, citing recent geopolitical developments that pose short-term inflationary risks. Nevertheless, a scenario involving monetary easing toward the end of the year remains highly probable. Another central banker, Kotecki, has indicated that there may be room for a 50-basis point rate cut this year. This week, two central bank meetings are scheduled—one in Hungary and the other in Czechia. In both cases, we consider a hold in policy rates the most likely outcome. In Hungary, the release of new macroeconomic projections and forward guidance could prove important for the monetary policy outlook for the remainder of the year. Meanwhile, in Romania, the formation of a broad political coalition has contributed to increased political stability. This has supported the Romanian leu, which, following several volatile weeks, has appreciated to below 5.05 against the euro.
Bond market developments
Last week, several CEE countries entered the sovereign bond markets. On Monday, Hungary issued USD 4 billion through a three-part dollar-denominated debt offering, following the government’s decision to increase external borrowing to support budgetary needs. Slovakia also conducted an auction, raising approximately EUR 530 million, thus completing equivalent to 69% of its total annual financing requirement. In addition, Hungary, Poland, Romania, and Czechia tapped their respective local bond markets, issuing approximately HUF 300 billion, PLN 11 billion, RON 3.26 billion, and CZK 17 billion, respectively. Looking ahead, both Romania and Poland are scheduled to return to their local bond markets this week. In rating-related developments, Fitch emphasized that Romania’s progress on fiscal consolidation and debt stabilization remains critical for its sovereign credit rating.
