KBC Market Research Desk
KBC Bank
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Hungarian and Czech retail sales surprised on upside
NBP to cut rates by 25 bps
Czech as well as Hungarian retail sales surprised positively in September. In the Czech Republic, headline retail sales grew by 6.2 % annually and only slightly less (4.5 %) after working-day adjustment, which is a promising result. Car sales, increasing by 15 % y/y according to the Czech Statistical Office, were the main driver of the favourable development. Retail sales statistics also suggest that household spending was the strongest engine of the Czech economic growth in 3Q 2014, despite the fact that consumption undoubtedly did not grow as fast as retail sales. Retail sales showed a significant improvement previous month also in Hungary. In annual terms, retail sales grew there by 4.5 %, supporting Hungarian central bank´s view that consumption will help the economy grow faster.
Regarding other regional events scheduled for today, the rate-setting meeting of the Polish National Bank will definitely attract most attention. Our opinion is that the National Bank of Poland will deliver a rate cut by 25 bps as inflation is likely to remain below its target for a longer time and also leading indicators have deteriorated (the latest PMI outcome being an exception). On the other hand, the labor market and household consumption fare fairly well. In addition, improving domestic demand weighs on the current account balance. Hence we neither expect a bold rate cut nor a launch of another monetary easing cycle anytime soon. In this respect, the tenor of many central bankers’ recent comments has been similar. This being said, though, it is fair to add that a more pronounced easing (such as that delivered in October) cannot be ruled out completely.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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