KBC Market Research Desk
KBC Bank
Yesterday, central European currencies firmed despite worse than expected PMI results. Regional PMIs mirror weakening in the euro zone but still remain above 50, indicating that expansion in the manufacturing sector is going on, only at a slower pace. Being underpinned by central bank´s commitment to keep rates on hold for an extended time period, the Polish zloty was the best performing regional currency yesterday. The NBP will hold its meeting tomorrow and we believe that participating MPC members will decide in line with their conviction that neither a strong zloty nor persisting deflation threaten the economy as much as to force them to loosen monetary policy.
Also the Hungarian forint firmed, though less than the zloty. The situation in Hungary differs from that in Poland. Like in Poland, fundamentals in the economy have been improving and price pressures remain subdued. The attitude of the Hungarian central bank, however, is different and it is very likely that gradual monetary easing will be maintained. The Hungarian rate-setter Csaba Kanracs said yesterday that cautious easing of the policy rate could continue. Recall that the next rate-setting MNB meeting will be held on May 26.
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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