CEE pushes to secure remaining RRF funds

On the radar

• Today, the CNB will decide on rates, we expect the key rate unchanged at 3.75%.
• Today, June Retail sales will be published in Romania, Hungary and Slovakia
• Czechia and Hungary will release Industrial output data for June.

Economic developments

CEE countries have stepped up efforts to absorb the remaining RRF funds as the deadline for submitting final payment requests approaches. Yesterday, the European Commission endorsed the amended Recovery and Resilience Plans (RRPs) of Croatia and Hungary, while Romania's amended RRP, endorsed by the EC in July, received final approval from the Council yesterday. Among the "last-minute" amendments submitted in July, Poland remains the only CEE country still awaiting both Commission endorsement and subsequent Council approval. Overall, around EUR 24bn in grants and EUR 18bn in loans remain available to CEE countries under the RRF. Of this amount, approximately EUR 10bn has already been requested through payment requests currently under assessment, with the remaining funds depending on the successful completion of milestones and targets before the facility expires.

Market movements

Markets remained relatively quiet yesterday, with only modest price movements. Today, attention will shift to the Czech National Bank (CNB) policy meeting, where we expect interest rates to remain unchanged. Looking ahead, the CNB is likely to choose between keeping rates on hold for the rest of the year or delivering one final rate hike. We lean slightly towards the former scenario, although we see the probabilities of both outcomes as broadly balanced. The ultimate decision will depend on incoming data and a range of external factors, including the ECB's policy stance.

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