Review
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Czech retails sales in January disappointed strongly when they fell by 5.0% y/y in January (down from December’s -1.9% y/y), which was significantly more than we and consensus expected. The outcome confirms that private consumption remains depressed. Looking ahead, we forecast negative retail sales in the coming months and given the combination of subdued private consumption and low inflation, the Czech central bank will have no need to tighten monetary policy conditions this year.
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Yesterday, the Polish labour market data was published. While employment came out more or less in line with expectations (it fell by 1.1% y/y, up from January’s 1.4% y/y fall), wages went up by 2.9% y/y, which was more than we expected and up from January’s 0.5% y/y.
Preview
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The Minutes from the latest Hungarian monetary policy setting meeting are worth following.
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We expect Polish industrial production to increase further in February compared with January, though we see slightly weaker numbers to consensus.
Trading update
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With EUR/USD higher ahead of the FOMC meeting and the better-than-expected German ZEW index, the CEE FX markets in particular rallied yesterday. The Polish zloty reversed some of its losses from before. Furthermore, the PLN was supported by hawkish comments from the new member of the Polish central bank’s MPC, Adam Glapinski, that the Polish central bank should tighten monetary policy conditions at the end of this year.
