Key events in EMEA next week

The National Bank of Hungary will most likely stick to last month's playbook at its meeting next week, given the high degree of uncertainty surrounding both the economic and inflation outlook. That means a 100bp hike in the base rate to 5.40% on Tuesday, while raising the one-week deposit rate (the effective rate) by 30bp to 6.45% on Thursday.

We don't expect any change in the forward guidance, and decision-makers remain committed to tackling inflation, which is surrounded by upside risks. This suggests a continuation of the rate hike cycle with similar steps until new incoming data (including the full effect of the war) require a change in the process (probably on the hawkish side).

Away from monetary policy, the focus will be on labour market data, where we expect a further improvement in wages in parallel with a roughly unchanged unemployment rate. That would indicate a labour market that is close to full employment.