GDP, inflation and Serbia’s central bank

4Q25 GDP data will be released in several CEE countries. Namely, Poland, Romania and Slovakia will publish economic performance figures for the last quarter of 2025. In Poland, already released preliminary full-year GDP growth in 2025 at 3.6% suggests a strong performance in 4Q25, while Romania and Slovakia likely saw a weaker end to the year. Serbia’s central bank will meet this week, but we do not expect any interest rate change at this point. January inflation will be released in Slovenia, Hungary and Poland. In Czechia, the final inflation reading and details will be published. Finally, December industrial output is due in Slovakia, Slovenia and Romania. Romania will also publish trade data and wage growth. On top of that, Fitch is scheduled to revise its rating and outlook for Romania, but we do not expect any change regarding credit risks in that country.

FX market developments

CEE currencies have strengthened over the last week. The EURHUF and EURCZK moved down more than the EURPLN, for which the change was rather marginal. Last week, the ECB kept interest rates unchanged. Local central banks in Poland and Czechia also went for stability of rates in February. Both banks are keeping their options open, however. Governor Glapinski suggested that there is space for further interest rate cuts, and we see March as likely, given that new inflation and growth projections will be published. In Czechia, Governor Michl admitted that an interest rate cut was discussed (with January inflation at 1.6% and the average inflation forecast lowered to 1.6% by the central bank). Core inflation will be the key figure to watch, however. If it declines, monetary easing may be in the cards (currently at 3% y/y in January). This week, Serbia’s central bank will hold a rate-setting meeting, but we do not expect any change at this point, despite the low inflation in recent months. Romania’s rating review should not bring any changes and we thus do not expect any market impact.

Bond market developments

Fixed income markets in CEE remained relatively calm last week, as central bank meetings brought no surprises and yields in major markets were broadly stable. In Czechia, the 2Y–3Y segment of the CZGB yield curve rose by about 10bp w/w and FRAs 9x12 moved higher as well, suggesting that markets are becoming less confident that there is room for more than one rate cut this year. However, given the substantial decline in headline inflation, the central bank will increasingly face questions about why it maintains a “restrictive” policy stance. With the upward revision to its growth forecast, we believe the CNB will closely monitor core inflation, inflation expectations and wage developments to assess whether fine tuning the policy rate is appropriate. In Romania, 10Y government bond yields fell by 10bp w/w, supported by the government’s pledge to target a budget deficit of 6.2% of GDP. Romania’s 10Y yields are now on par with Hungary’s. Last week, Poland tapped international markets with a four tranche Samurai bond issuance (3Y, 5Y, 10Y and 20Y), raising JPY 211.6bn. The Ministry of Finance also indicated it is considering a USD Eurobond issuance as part of its EUR 10-12bn foreign issuance plan for this year.

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