Articles
26 April 2019

Key events in EMEA and Latam next week

Despite the global tightening era coming to an end, the rationale of hiking rates still persists in the EMEA sphere. The Czech central bank is pretty much set to make a move higher next week, but the National Bank of Hungary - even though data says otherwise, is likely to stay put (for now)

National Bank of Hungary: How behind are we?

Despite the upside surprise in March inflation data and the recent advance in oil prices, we expect the National Bank of Hungary's rate-setting meeting to be a non-event. The central bank made it clear in March it doesn't intend to change monetary policy until there is new staff projections for decision-makers. The prolonged 'wait-and-see' approach may cause some upward shift in EUR/HUF as the market continues questioning how far the NBH is falling behind the curve. The expected double-digit wage growth might just add to those jitters.

On the other hand, the upcoming PPI data might show some softening, but it won’t be a game changer in terms of underlying inflation in the short-run. Other than this, we see manufacturing PMI falling in line with the latest Hungarian business sentiment indicator.

Turkey: Higher oil prices should help pull up inflation

Following a decline in core inflation in March, which emerged largely through the weakness in domestic demand (which in turn eased pricing pressures), we expect April inflation to be 2.2% MoM. This would pull the annual figure up to 20.1%; higher oil prices and an adjustment in cigarette prices standing as our main arguments. In the period ahead, exchange rate developments will be key, though the current economic backdrop - with ongoing weakness in domestic demand and base effects - will remain supportive.

A Czech rate hike is on the cards

Despite foreign uncertainties persisting, which suggests a more cautious approach in further monetary tightening, recent interviews with the Czech National Bank board appear to be relatively hawkish. T. Holub signalled a closing "opportunity window" for a hike in 1H19. J.Rusnok suggested a very narrow line between being on hold and hiking. M.Mora signalled a willingness to support a hike if forecasts enable that and - due to a weaker path for the CZK and a higher inflation trajectory, new forecast will more than likely indicate a hike. Moreover, a hike will be traditionally supported (again) by V. Benda and most likely by A.Michl too - both who voted for hikes during previous meetings. As such, given all recent signals from the board members, a hike seems like the most likely outcome next week now.

Poland: PMI's still in contraction territory

We expect a stabilisation of CPI dynamics in April at 1.7% YoY. The core inflation figure should also remain unchanged at 1.4% YoY.

The PMI index is unlikely to recover, given the weakness of German manufacturing. Therefore, we suspect the headline figure will remain below the 50pt threshold.

EMEA and Latam Economic Calendar

Source: ING, Bloomberg
ING, Bloomberg
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