NBH won't start a new easing cycle soon

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CNB´s Tomsik sees no reason to manipulate the crown

NBH won’t start a new easing cycle soon

Syriza´s victory in Greek parliamentary elections has had limited impact on Central European currencies. The koruna, the forint and the zloty, which had weakened at the beginning of yesterday’s trading session, wiped out the losses during the day. Interestingly, prospects of a radical left-wing party governing Greece combined with ECB’s launch of the next round of quantitative easing push Swiss franc towards still stronger values. Unlike in recent years, Polish economy appears to be most vulnerable to this phenomenon, for in Hungary, most household loans denominated in foreign currency have been already converted into national currency. In contrast, the share of CHF denominated mortgages in Poland, though falling, still amounts to more than 30 %. Yesterday, the Polish Prime Minister Ewa Kopacz reiterated that the state might help holders of CHF denominated mortgages at the expense of banks.

In today’s trading, the Czech koruna may be supported by CNB´s vice-governor Tomsik recent statement in favor of status quo with respect to the current setting of central bank´s FX policy. Recall that it was Mr. Tomsik’s article in mid-January that spurred a wave of speculations about upcoming shift of the EUR/CZK floor, leading to weakening of the koruna. Among today’s regional events, a rate-setting meeting of the Hungarian central bank will likely attract markets‘ attention. In our view, likelihood of triggering a new easing cycle is fairly high but not immediate. We believe that the NBH will wait for January inflation figures and the impact of the recent ECB’s decision on the Hungarian market. So the first rate cut may come rather in February.

In today’s trading, the Czech koruna may be supported by CNB´s vice-governor Tomsik recent statement in favor of status quo with respect to the current setting of central bank´s FX policy. Recall that it was Mr. Tomsik’s article in mid-January that spurred a wave of speculations about upcoming shift of the EUR/CZK floor, leading to weakening of the koruna. Among today’s regional events, a rate-setting meeting of the Hungarian central bank will likely attract markets‘ attention. In our view, likelihood of triggering a new easing cycle is fairly high but not immediate. We believe that the NBH will wait for January inflation figures and the impact of the recent ECB’s decision on the Hungarian market. So the first rate cut may come rather in February.