CEE FX: Potential rate hikes in focus – Societe Generale

Czech GDP and wage growth have undershot the central bank’s August forecasts, whereas inflation has exceeded expectations, Societe Generale notes. Against this backdrop of persistent inflationary pressures in the Czech economy, the bank forecasts a 25 basis point rate rise from the Czech National Bank at its next meeting, reflecting a cautious approach to monetary tightening.

CNB expected to favour tighter policy

"In CEE, both Czech and Poland central bank meetings will be live this week."

"Czech GDP and wage growth have undershot the bank’s August forecasts but inflation surprised to the upside. Against this backdrop, we expect the CNB to lean in favour of +25bp."

"We expect the NBP to keep rates unchanged at 3.75% after last month's downside inflation surprise reduced the urgency for immediate action. Policymakers are likely to retain a hawkish bias and keep the door open to further tightening if inflation risks re-emerge."

"EUR/PLN has recently crossed upper limit of a brief range; next projections are located at 4.44 and 4.48; last week’s low of 4.3850 could be an important support."

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