CEE: Poland, Romania and Serbia to keep rates

Erste Bank Research Team Erste Bank

On the radar

Inflation in Czechia increased to 2.5% y/y in September.
In Hungary, industry grew by 8.7% y/y while retail sales went up by 2.4% y/y.
In Slovakia, retail sales grew by 1.6% y/y while in Romania growth was at 0.1% y/y in September.
Today, Poland’s central bank holds a rate setting meeting and we expect no change.
Hungary will release inflation in September, while Czechia will publish industrial output and trade data.
Serbia is scheduled to show producer prices growth.

Economic developments

Today, Poland’s central bank holds a rate-setting meeting, and we expect the key policy rate to remain unchanged. Furthermore, the reinstatement of the CPN program significantly reduces the likelihood of NBP rate hikes before year-end. Yet, the new NBP projection in November will likely show a markedly higher CPI path, potentially approaching 5% in the first quarters of 2027, which could provide a basis for opening a discussion on rate hikes. Tomorrow (Thursday), there are central bank meetings in Romania and Serbia, and we expect rates to remain unchanged there as well. In Romania, the discussion is likely to begin around the turn of 2026 and 2027, when inflation falls below the key policy rate. In Serbia, headline CPI stood at 2.2% in August, but elevated core inflation is preventing the central bank from easing monetary policy. Overall, the current situation calls for less aggressive rate hikes compared with the inflation shock of 2022 and 2023. The previous inflation shock was preceded by an ultra-low interest rate environment, with key policy rates close to zero or even negative and long-term interest rates in many cases depressed below 2%. Furthermore, many central banks expanded their balance sheets shortly before the onset of the inflation shock, either through funding operations or QE programs. More recently, central banks have been reducing their balance sheets, contributing to a tightening of monetary conditions.

Market movements

EUR/USD remains close to 1.12 as French debt stress has spread, with the French-German 10-year yield spread at its widest since the 2010–12 crisis. CEE currencies remain weak against the euro, although EUR/CZK, EUR/HUF and EUR/PLN have not moved further up in recent days. EUR/RON is as high as 5.34. Long-term yields have eased lately across the region. As for other local news, inflation in Czechia at 2.5%, combined with elevated core inflation, supports monetary tightening at the November meeting. In Slovenia, the finance minister presented the draft 2027 and 2028 state budgets to parliament, with 2027 revenue of about EUR 17bn against EUR 19.4bn of spending.

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Erste Bank Research Team

Erste Bank

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