CEE: Central bank meetings in Poland and Serbia

There are two central bank meetings in the region. Both Poland and Serbia are expected to keep the policy rate stable at the upcoming meetings. In Poland, the increase in inflation and elevated commodity prices will forestall any discussion on monetary easing (despite Governor Glapinski’s suggestion of such possibility back in July). Rate hikes are also not on the horizon. In Serbia, the political landscape and expected ECB rate hike will make the central bank cautious despite easing inflation. Further, August inflation will be released in Hungary, Romania and Serbia. Romania will also show the 2Q26 GDP structure. Industrial output growth in July will be released in several countries as well (Hungary, Czechia, Slovenia and Slovakia) and we expect some moderate growth dynamics. Finally, Fitch Ratings is scheduled to review the rating and outlook of Slovenia and S&P will review the rating and outlook of Croatia and Serbia. We expect no change on that front.

FX market developments

The Polish zloty and the Hungarian forint strengthened against the euro last week. In the case of Hungary, we attribute the movement to local news about the possibility of no rate cuts in September, given the expected change of inflation target. Having it lowered would limit the scope for monetary easing. We have our reservations, however, as to whether it will already happen at the upcoming meeting. We also sustain our call for the key policy rate at 5% at the end of the year. In Czechia, we have seen the currency slightly weakening against the euro over the last week. Although real wage growth eased in 2Q26 following the downward revision of 1Q26 real wage growth, we believe Czechia’s central bank will sustain its hawkish stance and raise interest rates by year-end. This week, Poland and Serbia have interest rate decisions scheduled. We expect stability of rates in both countries. It will be interesting to follow Governor Glapinski’s press conference in Poland to evaluate how the central bank sees the interest rate outlook.

Bond market developments

We saw mixed developments in CEE bond markets last week. Hungarian yields declined sharply in the second half of the week, which could be partly associated with leaked information that the Hungarian central bank is preparing to lower its inflation target to 2.5% and pause interest rate cuts at its next meeting. While reduced prospects for monetary easing would normally be bond-negative, a stronger commitment to bringing inflation down should be positive for bonds in the longer run, not only in the context of any future euro-adoption ambitions but also by helping to anchor inflation expectations at lower levels. Yields on 15-20Y HGBs fell by 15-20bp w/w. In contrast, the POLGB curve shifted upwards as the draft budget revealed no improvement on the fiscal side, implying continued rapid growth in public debt. As a result, the spread between 10Y HGB and POLGB yields reached a new low of -63bp. In Czechia, moderate wage growth figures, including a downward revision to 1Q26 data, supported CZGBs as the CNB is now seen as being under less pressure to hike rates; FRAs also declined slightly.

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