Key events in EMEA next week

Money supply (7.3% year-on-year):

We estimate that money supply (M3) went up by 7.3% YoY in September vs. a 7.4% YoY increase in October. Both household deposit and corporate deposit growth are projected to increase in annual terms. At the same time, loans to households are very poor as mortgage loans are in free fall, whereas loans to enterprises are expanding robustly (mostly current loans). We forecast that cash in circulation continued to see a monthly decline.

Registered unemployment (4.8%):

We project registered unemployment to have remained unchanged at 4.8% in September. The economy is slowing, albeit gradually, and demand for labour remains solid. Tight labour markets and shortages of skilled workers are making businesses reluctant to lay off staff which may be difficult to re-employ later on. We expect labour hoarding during the current downturn to be substantial.

The National Bank of Hungary held an emergency meeting in mid-October, switching to a ‘whatever it takes’ approach. We expect the central bank to maintain this new modus operandi to ensure market stability. This means no material change in the monetary policy set-up at the upcoming regular rate-setting meeting. We expect the base rate to remain unchanged at 13%, while the effective rate (the new overnight deposit quick tenders rate) should remain at 18%. In addition to monetary policy, the focus will be on labour market data. With more and more companies giving one-off support to their employees or raising wages to mitigate the impact of the cost-of-living crisis, we expect an acceleration in wage growth. On the other hand, some companies are reacting to rising energy bills with cost-saving steps, translating into a higher unemployment rate.