Look for:

Our offer for

Research Detail

2019/11/18 / Erste Group Research

Hungarian central bank to maintain dovish stance

Weak ahead: Next week, the Hungarian central bank meeting is the most important event in the region. The Hungarian inflation rate increased slightly in October to 2.9% y/y, while seasonally-adjusted core inflation stood at 4%. However, the figures are unlikely to bring any change to the current dovish stance. We thus expect the MNB to maintain an accommodative monetary policy by keeping the target rate and overnight deposit rate unchanged. Apart from that, there are no major data releases scheduled anywhere but Poland. Shortly after the release of flash GDP in the third quarter, we get to see industry performance for October. The industrial output growth dynamics will set the first expectations for the development of the economy in the last quarter. At the end of the week, we will release the GDP growth revisions in Hungary and Romania. While in Hungary, the strong 5% y/y growth in 3Q19 raises our expectations for 2020, in Romania, the disappointing 3Q GDP release at 3.0% y/y results in a gloomier outlook.

CEE currencies weakened last week, but the Hungarian forint was no longer an outlier, as the central bank stopped increasing the FX swap volume outstanding. The Czech koruna also lost some ground, but we see this as a temporary development; this also fits with the fact that, among CEE local currency bonds, Czech 10Y yields fell the most. After moving above 7.45 by end-October, the EURHRK started consolidating below 7.45 this week, which is not far from our call. The zloty also weakened to levels closer to our forecast for the year-end.

Yields were mixed overall in CEE. While Czech, Polish and Hungarian yields fell, the Romanian 10Y RON yield increased substantially, on news that a fiscal deficit overrun is likely already this year. After the nearly monotonous yield declines earlier this year in Croatian bonds, a notable upward movement was observable. Serbian EUR yields also increased last week. As for Serbia, we do not see that the central bank needs to ease monetary conditions in the near future after cuts earlier this year, which could also reduce the attractiveness of Serbian fixed income.

PDF Download Download PDF (517kB)

General information

AuthorErste Group Research
Product nameCEE Insights
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.


Any information, material and services regarding financial instruments and securities provided by Česká spořitelna/Erste Group/ or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites“) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions.

By agreeing to this hereto, the visitor entering this Websites confirms that has read, understood and accepted this Information and the Disclaimer