Hungary to keep rates stable

The Hungarian central bank will hold a rate-setting meeting on Tuesday, and we expect stability of rates given recent inflation development. Poland will release data on industry and retail for June, allowing us to already see economic performance in the whole second quarter of 2025. On top of that, we will also see labor market data, in particular wage and employment growth in June as well as the unemployment rate. Labor market data will also be published in Croatia and Hungary (unemployment rates in June) as well as in Serbia (wage growth in May). In Romania, the Constitutional Court is to decide on the fiscal package, but we do not expect any controversial ruling. The motion was filed after the opposition did not succeed with the no-confidence vote. Finally, on Friday after market closes, Fitch Ratings will publish its rating and outlook review for Serbia - we expect no change.

FX market developments

Despite some intra-week volatility, CEE currencies remain close to the levels we saw a week ago, but remain sensitive to global developments (ECB meeting this week). The threat of 30% for the EU as of August 1 seems less likely after President Trump’s announcement of sending a letter to 150 countries notifying them their tariff rates could be 10% or 15% as he forges ahead with his trade agenda. If 30% tariffs were to happen, based on the ECB model, which also takes into account US tariffs against other trading partners, it would reduce our GDP forecast for 2026 by 0.4pp, i.e. to 0.6% (from the 1% currently expected). Taking these estimates into account suggests a risk for CEE growth to be lower on average by around 1pp in 2026. The final impact will depend on each country’s exposure to the US, current effective tariff rate as well as fiscal and monetary stance. This week, the Hungarian central bank holds a rate-setting meeting and the key rate is expected to stay at 6.50% amid recent inflation development. We maintain our view, however, that we may see some monetary easing at the end of the year.

Bond market developments

A couple of countries successfully placed government papers on the market, as demand for LCY bonds has been solid. The Romanian government survived the no-confidence vote initiated by the opposition. Fitch Ratings highlighted the importance of political stability for the implementation of fiscal reforms and reiterated Romania's deficit reduction, and debt stabilization are key for the sovereign rating. Several CEE countries will be active on the bond market this week. Hungary plans to tap international bond market with sales of so-called panda bonds (5 billion yuan). Romania completed the 2025 issuance plan of bonds denominated in foreign currency (EUR 13 billion) according to Treasury Chief Nanu. This week, Romania plans to place 2030, 2032 and 2038 in local government papers. Slovakia, Serbia and Poland have bond auctions planned as well. Hungary is going to sell the T-Bills.

Download The Full CEE Market Insights