New car registrations up in most of CEE

On the radar

• Hungarian central bank cut policy rate to 6.0% y/y on Tuesday.
• Today Poland releases unemployment rate at 9.30 AM CET.
• There are no other releases scheduled in the region.

Economic developments

Picture regarding new car registrations has not changed much since last month. Between January and May, year-to-date car registrations were growing in most of the countries. Romania and Slovakia remain to CEE countries in which new car registrations declined. In Romania such developments reflect particularly weak consumer confidence and loss of purchasing power of households driven by fiscal consolidation. Economic development in Slovakia has also been weaker compared to other CEE countries so far. While Slovenia clearly outperforms with growth of new car registration at 20% y/y year-to-date, in Croatia, Hungary or Poland growth remains relatively solid. Actually, growth dynamics in these three countries is in line with EU developments. New EU car registrations increased by 4%, indicating a strong start to the year amid a backdrop of persistent geopolitical headwinds weighing on the outlook. Further, up until May 2026, battery-electric cars accounted for 20% of the EU market, an increase from 15.3% a year earlier. Hybrid-electric car registrations captured 37.8% of the market, remaining the preferred choice among consumers in the EU. Moreover, the combined market share of petrol and diesel cars declined to 30.1%, down from 38%.

Market movements

As was broadly expected, Hungarian central bank delivered 25 basis points rate cut on Tuesday. Moreover, The MNB published the main figures for the new Inflation Report which will be revealed on Thursday. According to the central bank’s updated forecast Hungary’s GDP will rise by 2.0 percent in 2026, 3.0 percent in 2027, and 2.9 percent in 2028. Average inflation will be 1.8 percent this year, 2.3 percent in 2027, and 3.0 percent in 2028 in the MNB’s assessment. That is a huge change compared to the March figures but also to the current consensus, which stands at around 3 percent for this year. More importantly, however, the forward guidance has also radically changed as central banks stated that “if favorable developments persist, the Council – while maintaining a positive real interest rate – sees room for further interest rate cuts throughout the summer, with a decision on their continuation to be made based on the September Inflation Report”. We will be revising our forecasts accordingly. Hungarian forint as well as other CEE currencies have been weakening against the euro this week while long-term yields have declined. Regarding developments in Romania, Romanian President Dan urged political parties to agree swiftly on support for a minority government to end weeks of turmoil. Dan said a minority cabinet is emerging as a solution to the current crisis following talks with all parliamentary forces on Tuesday in the wake of a failed vote to install a new government the previous day.

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