Articles
28 September 2018

Key events in EMEA and Latam next week

In the week ahead, we expect central banks in Romania and Poland to reiterate that their tightening paths are on hold for the remainder of 2018 

National Bank of Romania to stay on hold at 2.50%

With inflation expected to fall towards the target band in the next couple of quarters and a general dovish bias within the National Bank of Romania (NBR), we expect the central bank to stay on hold for the remainder of this year, likely citing the need to assess the impact of both the previous policy tightening as well as incoming data, after recent GDP growth figures surprised to the downside.

At the same time, we are seeing the market consensus, which was tilted towards more aggressive tightening, converging to our long standing call for a lower terminal rate between 3.25-3.50%. It seems the NBR also expects CPI and interest rates to converge, meeting somewhere within this range. Still, our latest reading of NBR rhetoric suggests overconfidence in achieving its inflation goals, which might turn into over-complacence. We expect the key policy rate to converge towards market rates, implying three more hikes from the NBR in 2019, of 25 basis points each. It's unlikely that the NBR will commit to regular open market operations to accommodate the interbank liquidity conditions, keeping more flexibility on liquidity management if needed to fend-off currency depreciation pressures.

Poland: Don't expect a change in rates anytime soon

We expect the Monetary Policy Council (MPC) to reiterate that interest rates should remain flat through the end of 2019. The National Bank of Poland's President Adam Glapiński is likely to play down recent increases in oil prices, given the supply-side character of the shock - thus remaining out of the MPC's control.

Turkey: Inflation trending upwards

Inflation will remain on an uptrend as the Turkish lira's depreciation feeds through to prices quickly and aggressively. Administrative price hikes, strength in cost-led price pressures and a deterioration in inflation expectations - despite weaker domestic demand- will also push inflation higher. We expect September inflation at 2.2%, which pulls the annual figure up to 19.7% from 17.9%.

Czech manufacturing PMI to slow further

The Czech Manufacturing PMI is likely to decelerate further towards 54 points in September, given similar indicators in Germany and the eurozone. This is in line with an expected slowdown in domestic industrial growth this year, so no surprise. Although industrial confidence stagnated in September, based on a survey by the Czech Statistical Office, it still remains below the 2017 average.

EMEA and Latam Economic Calendar

 - Source: ING, Bloomberg
Source: ING, Bloomberg
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