KBC Market Research Desk
KBC Bank
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Polish hard monthly data confirm strong recovery
NBH is going to cut by another 10 bps tomorrow
While the EUR/CZK continued to flirt with CNB’s intervention floor set at the 27.0 level, the other regional currencies – the zloty and the forint – finished at strong levels last week too as a (temporary) end of the Greek saga brought some relief to global (risky) markets.
Recall that the spending appetite of Polish households was confirmed by Friday’s release of the June retail sales data, which slightly surpassed market expectations. In addition, June’s retail sales rose by 6.6% y/y in real terms. The sustainability of the overall positive development of the Polish economy is also suggested by the data from industry, which was also better than expected, as reflected in the latest data about the mood in the manufacturing industry. We believe that June’s figures did not include any information significant for the central bank, which will most probably keep rates stable until the end of this year.
Tomorrow there will be the only regional eye-catcher of this week – an interestrate- setting meeting of the National Bank of Hungary. Although we see no reason to continue the monetary easing, the calm down of global sentiment is likely to lead to rate cut next Tuesday, so base rate might be moderated from 1.5% to 1.4%. As concerns a possible market reaction we believe that a 10 bps cut has already been priced in. The cut will, however, make HUF less attractive and in addition the NBH attempts to squeeze out foreign investors from the domestic bond markets which might weaken the HUF too.
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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