Key events in EMEA next week

In Hungary, the highlight of the week is the rate-setting meeting of the National Bank of Hungary. However, we are not expecting any fireworks from the monetary authority, and no change is expected in either the policy rates, framework or the hawkish commitment. The latter in particular should remain in place, given we are bracing for an inflation spike over coming months, with the headline reading set to jump above the central bank’s tolerance band. Despite this forecast, we expect the NBH to align with the Federal Reserve, being only reactive and signalling it won't act pre-emptively based on forecasts. Speaking of which, we see no major change in the Inflation Report when it comes to the macro outlook.

The Czech National Bank (CNB) is to stay on hold next Wednesday and should reiterate the latest board members’ comments that front-loaded tightening (i.e., in 2Q) is unlikely given the deteriorating Covid situation. Still, with inflation higher than the CNB's expectations and with 4Q20 GDP and wages also stronger, the case for tightening in 2021 remains intact. We look for two hikes in 4Q21.