Czech Republic
Czech industry continued to plummet in April
Hungary
NBH stays on hold
Poland
Poland remains the only country of the region showing positive growth
Overview
CNB and NBP have not left easing mode
While markets of risky assets are still being fuelled by the hypothesis of the spring signs of recovery, the central banks of the Czech Republic and Poland are concerned with something else. They seem to be primarily setting the stage for being able to cut official interest rates again, thus relieving the economy.
Unlike the United States, and particularly certain Asian countries, where signs of a stabilisation of the economic downturn are already evident, nothing like that is true for the Czech Republic and Poland at the moment. This was confirmed by both the flash forecast of April’s industrial output in the Czech Republic and Poland’s GDP forecast for the first quarter of this year. Both values are in line with the moderate statements by Members of the CNB Board and the NBP, who particularly highlight the poor performance of their economies.
Thus, given the fact that, with the current levels of the koruna and the zloty, neither the CNB nor the NBP need to be concerned about a weak local currency and the possible upside inflationary consequences, additional cuts in the official interest rates in the Czech Republic and Poland appear to be highly probable. And when are those rates going to be cut? Both central banks are likely to cut their rates by another 25 basis points as early as in June. For the CNB, this was indicated by the series of dovish comments from Members of the CNB Board. For the NBP, this will depend on when the bank discusses the new inflation forecast, which will include a new, probably more pessimistic, outlook for the Polish economy.
