CEE FX: Central banks comfortable waiting out shock – ING

FXStreet Insights Team FXStreet

ING’s Frantisek Taborsky highlights that Central and Eastern European FX and rates have seen some relief despite elevated energy prices. Regional central banks currently treat the Gulf-related energy spike as a supply shock and prefer to wait, with no case for hikes. A more benign inflation backdrop than in 2022 gives them room to stay on hold for longer.

Supply shock argues for policy patience

"Along with global markets, the CEE region saw some relief yesterday despite energy prices remaining elevated. Rates eased from Friday’s highs and FX saw some relief as well. February secondary inflation figures in Poland and the Czech Republic confirmed a favourable starting point before the US-Iran conflict. However, the question is how long higher energy prices will remain."

"For now, it seems that central banks in the CEE region view the shock as a supply-side problem and prefer to see it through. This only makes sense as long as the conflict is short-lived and we can only attribute a few tenths of a percentage point to headline inflation through higher fuel prices. For now, we see that we should stick with this scenario and possibly a limited second-round impact on inflation, assuming that FX remains relatively stable as we have seen so far."

"In such a scenario, central banks in the CEE region will be on hold, and outpricing rate cuts make sense. But for now, we do not see a case for rate hikes, which the market quickly priced in."

"The starting point for this conflict is very different from 2022, when the Ukraine‑Russia war began. Back then, the economy wasn’t fully reopened after Covid, households held excess savings from government support, pent‑up demand was strong, and inflation was already climbing. In the current environment, inflation is below target, FX is more stable, the current account has improved, and the domestic economy is far more predictable than during Covid. This gives central banks room to wait longer – which is our baseline for now."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD weakens below 1.3250 as UK Prime Minister Keir Starmer resigns

The GBP/USD pair loses ground to near 1.3245 during the early Asian trading hours on Tuesday. Political uncertainty in the United Kingdom continues to weigh on the British Pound against the US Dollar. The preliminary readings of the S&P Global Purchasing Managers Index from both the US and the UK are due later on Tuesday.

EUR/USD moves little amid market caution on ongoing US-Iran talks

EUR/USD steadies after registering modest losses in the previous day, trading around 1.1430 during the Asian hours on Tuesday. The currency pair remains locked in a tight range as traders closely monitor diplomatic developments surrounding ongoing talks between Washington and Tehran in Bürgenstock, Switzerland.

Gold holds lower ground near $4,150 on hawkish Fed bets

Gold struggles to capitalize on the previous day's modest gains and edges lower to near $4,150 in the Asian session on Tuesday. Firming expectations for a Fed rate hike and geopolitical uncertainties help the US Dollar to stand firm near its highest level since May 2025, undermining bullion.

NYSE parent ICE, OKX partners to expand tokenized equities and digital asset markets

The New York Stock Exchange parent company, Intercontinental Exchange, and crypto exchange OKX have formed a joint venture to develop infrastructure for tokenized and blockchain-native financial products, according to a statement on Monday. The venture will seek to operate as a US-registered broker-dealer and futures commission merchant, subject to regulatory approvals.

Are American consumers actually “resilient“?

A common label gets placed upon American buyers: resilient. Just last week, Marianne Lake, the CEO of Consumer and Community Banking — and a member of the JPMorganChase Operating Committee — affirmed this sentiment. While she did note some weariness regarding future inflation’s effect on consumers, she reiterated the common adjective: resilient.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.