Parliamentary elections in Croatia

Final inflation footprints will be released in Slovakia, Poland and Croatia. In all three countries, we have already seen flash estimates of local offices or HICP. In terms of price development, Czechia and Slovenia will publish producer prices for March. Other than that, we will see current account development for February in Slovakia and Serbia, the unemployment rate in Slovakia and Croatia for March and wage growth in February in Croatia. While the economic calendar is relatively empty, Croatia will be casting votes on Wednesday, as parliamentary elections are scheduled for Wednesday, April 17.

FX market developments

The EURPLN moved down throughout the week, while the Czech koruna and Hungarian forint remained weak against the euro last week. The Polish Prime Minister commented on the recent strengthening of the Polish zloty by saying that it is worth having a balanced exchange rate. He also sees the recent FX market development as a sign of investor confidence in his cabinet. As for monetary policy comments in Poland, MPC Dabrowski said that stability of rates is the most likely scenario in 2024, while MPC member Wnorowski would imagine a situation in which throughout the year arguments for monetary easing appear and some decisions are even made. Serbia’s central bank kept the key rate unchanged at 6.5%. We still see the NBS waiting for the ECB and Fed to move first, before cutting its rates, likely starting in July. Overall, we forecast the NBS to ease by a total of 125bp by year-end, absent any new inflation shocks. Last but not least, the ECB essentially met the market's expectations, as the key interest rates were left unchanged and the statements continued to prepare the markets for a rate cut in June.

Bond market developments

10Y LCY government bond yields were up 15-20bp last week in CEE, topping 4% and 7% in Czechia and Hungary, respectively. We saw some correction of this upward move on HGBs at the end of last week, as inflation declined further and the government announced that it will take further measures to curb the deficit. In Czechia, although inflation remained at the target, it surprised on the upside, with prices of services bringing particular concerns regarding underlining inflation pressures. Next week, Slovakia will reopen several bond issues in its regular monthly auction, intending to borrow about EUR 500mn. Romania will reopen ROMGBs 2028 and 2030, Poland will offer a series of bonds, while Hungary and Czechia will sell T-bonds. 

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