KBC Market Research Desk
KBC Bank
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NBP sees no more rate cuts
Hungarian PPI fell annually by 3.2 %
Central European currencies opened the new week calmly. The Czech koruna traded within a narrow band around its current levels, while the forint and the zloty slightly firmed. With negative interest rates in the Eurozone, the Hungarian and the Polish assets look increasingly attractive. The Polish currency has been additionally supported by recent comments of a few MPC members. After the NBP board member Elzbieta Chojna-Duch had said on Friday that interest rates had not always been the best instrument to counter market turbulence, another central banker, Andrzej Bratkowski, reiterarated yesterday that the NBP took its commitment to keep interest rates stable seriously. Mr. Bratkowski, who, like Ms. Chojna-Duch, counts among dovish NBP members, said that the strong zloty was no argument for rate cuts. Moreover, according to his view, the zloty has still ample space for strengthening before Polish exporters will really start to suffer...
Regarding fresh economic data, the final 2014Q4 Czech GDP does not differ much from preliminary figures. The Hungarian producer prices have brought a bigger surprise. According to the Hungarian statistical office, PPI fell by 3.2 % annually and 1.9 % if compared to the previous month. The accelerated price fall was driven primarily by domestic sales prices (-4.7 % y/y). Export sales prices dropped by 2.3 % y/y. Negative producer price inflation, though, should not have strong influence on monetary policy in Budapest and we expect that the NBH will proceed with its cautious and gradual rate cut cycle.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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