Inflation in Eurozone below two percent

Erste Bank Research Team Erste Bank

On the radar

Producer prices in Romania landed at 2.7% y/y in August.
Unemployment rate in August arrived at 5.5% y/y in Romania, marginally up compared to July.
In the afternoon, Polish central bank will announce interest rate decision. We expect no change.

Economic developments

Flash estimate of euro area inflation arrived at 1.8% y/y in September 2024, down from 2.2% in August. While prices for services are expected to have the highest annual growth rate in September (4.0%, compared with 4.1% in August), energy prices dragged the headline footprint visible down (-6.0% y/y compared with -3.0% y/y in August). This effect is likely to fade out in the months to come, however. As far as September’s flash estimates are concerned in the region, we have seen inflation falling in Croatia and Slovenia to 1.6% y/y and 0.6% y/y according to local statistical offices’ estimates. In Croatia, September figure adds a notch or two of downside risks to our 3% CPI average forecast for 2024. Further, in Slovakia, HICP inflation also edged down in September. Only in Poland, headline inflation increase was quite substantial to 4.9% y/y from 4.3% y/y in August. In Poland, our projection anticipates broadly stable annual inflation through the remainder of the year.

Market movements

The key event today is the central bank meeting in Poland. We believe that the key policy rate will remain unchanged at 5.75%. Poland is the only country in the region that has been holding off with interest rate cuts in 2024. First and foremost, inflation rate increased and is visibly above the central bank target and out of the tolerance band. However, it should be noted that it is due to statistical effects. Further, Poland has sustained solid growth as opposed to the peers. In Romania, Isarescu will remain in the post of the central bank’s governor. He commented on the prospects of Romania joining the Eurozone, underlying that fiscal consolidation must come first. Transition to budget deficit at the 3% of GDP (Maastricht criteria) will take another five or seven years. In Czechia, 2024 budget deficit was increased by CZK 30 billion (around 0.4% of GDP) due to flood damages. The CEE currencies have been weaker against the euro at the beginning of the week, while long term yields moved marginally down in most of the CEE countries.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.