Key events in EMEA next week

Russian activity data for June is likely to show moderation in the annual growth rates, primarily due to the base effect. But growth in retail trade should remain in double-digit territory. For the second half of the year, we are more cautious, as in addition to the statistical effects, consumption should become more constrained by the reopening of mass outward tourism while accelerating inflation will eat into real incomes. Still, the recovery trend could be supported by fiscal policy, if additional non-oil revenues collected from this year's budget are re-distributed in favour of current spending, ahead of September's parliamentary elections.

In Hungary, the highlight of the coming week is the July rate setting meeting. After a significant upside surprise in inflation in June, we see the central bank continuing its hiking cycle with a 30bp effective move. This will put both the base rate and the one-week deposit rate at 1.20%. The National Bank of Hungary could also strengthen its hawkish message by moving the whole interest rate corridor upwards. With such a shift, the overnight deposit rate would move back to positive territory for the first time since early 2016. When it comes to the forward guidance, we see no change to the hawkish tone. Later in the week, incoming labour market data will be pro-inflationary, with strong wage growth and a further drop in the unemployment rate (increasing the labour shortage) in Hungary.