Key events in EMEA and Latam next week

The National Bank of Hungary meets next Tuesday. The dichotomy still prevails, so domestic factors are heating while external ones are cooling the economy. In line with the central bank's expectations, external effects have started to dominate in the last few months, driving down inflation to the target of 3%.

The worsening economic outlook, the dovish tone of major central banks and elevated global uncertainties coupled with oil price and FX shocks are likely to support a status quo decision by the NBH. Against this backdrop, we see no change in interest rates. The real questions are whether the central bank releases forward guidance (generally we see no reason for doing it taking into consideration the mounting uncertainties around the inflation outlook) and how inflation and GDP forecasts will change in the upcoming new Inflation Report.

The Czech National Bank (CNB) meeting next Wednesday should not bring any change to the current CNB monetary stance.

Czech data is broadly in line with CNB estimates while inflationary and wage pressures continue. CNB board member Tomas Holub indicated in his last interview that the central bank will be discussing whether to hike rates or remain on hold. Tomas Holub confirmed that an on-hold decision seems to be preferred given the risks abroad. We also believe this will be the CNB majority view, as other board members also have signalled recently that longer-term rates stability is the preferred option given the current risk environment.

We expect the government budget in August to close with a similar deficit compared with July. Lack of progress in revenue collection would pose a question mark, as to whether a balanced budget is possible next year.