Key events in EMEA next week

The Czech National Bank (CNB) will meet next week on Thursday, and will present its last published forecast of the year. We're going into the meeting expecting the first 25bp rate cut to 6.75%, a view we have held since June. The new forecast should move in a dovish direction and persuade undecided board members to cut rates in November. The main risk for the coming days will be the geopolitical situation and its impact on energy prices and EUR/CZK, which we believe is now the CNB's main concern.

Flash CPI (Oct): 6.9% YoY

We forecast that CPI continued moderating in October and fell slightly below 7% year-on-year. According to our estimates, food prices rose in monthly terms for the first time in five months – but the scale of the increase was much lower than in October last year, which translated into further disinflation in food prices in annual terms, pushing it into single-digit territory. We judge that slower annual growth in house energy and deeper decline in fuel prices also contributed to disinflation.

Given the deterioration in pricing behaviour and the effects of the post-election adjustment in FX, wages and taxes, inflation will likely remain elevated in the near term. Accordingly, we expect annual inflation to increase further to 63% in October (with 4.5% month-on-month reading) from 61.5% a month ago.