Review
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Hungarian inflation in October dropped to 4.7% y/y, well below the consensus expectation of 5.0% y/y. We had forecast 4.8% y/y. Despite below-forecast inflation, the room for further monetary easing is fairly limited, in our view – we see one 25bp rate cut.
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Romanian inflation in October also dropped considerably, to 4.3% y/y, down from 4.9% y/y in September. Despite the downtrend, we do not expect any further monetary easing in the near future. The Romanian central bank will likely keep a cautious stance towards monetary policy as long as the political situation remains deadlocked and the next tranche from the IMF is out of sight.
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The final release of the Czech Republic’s September industrial production was in line with the flash estimate of -11.9% y/y published at the end of October. We expect a moderation in the pace of decline of industrial production going forward.
Preview
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Very thin calendar in terms of economic data in EMEA region today.
Trading update
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On Wednesday the EMEA currencies continued to develop in line with the signals from our Scorecard. The zloty, which has the biggest score in our Scorecard, was again the top performer.
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Hungarian rates fell considerably yesterday on the back of positive risk appetite in financial markets and lower-than-expected inflation.
