CEE FX: Rate hike prospects – Societe Generale

Societe Generale highlights that Czech GDP and wage growth have fallen short of the central bank’s August projections, while inflation has surprised on the upside. In this context, the bank expects the Czech National Bank to deliver a 25 basis point rate increase at its upcoming meeting, signaling a cautious tightening stance in response to persistent inflation pressures in the Czech economy.

CNB seen leaning toward tightening

"In CEE, both Czech and Poland central bank meetings will be live this week."

"Czech GDP and wage growth have undershot the bank’s August forecasts but inflation surprised to the upside. Against this backdrop, we expect the CNB to lean in favour of +25bp."

"We expect the NBP to keep rates unchanged at 3.75% after last month's downside inflation surprise reduced the urgency for immediate action. Policymakers are likely to retain a hawkish bias and keep the door open to further tightening if inflation risks re-emerge."

"EUR/PLN has recently crossed upper limit of a brief range; next projections are located at 4.44 and 4.48; last week’s low of 4.3850 could be an important support."

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