Polish and Czech central banks in focus

Next week, central bank meetings in Poland and Czechia will be the main focus. After a higher than expected flash estimate for October inflation in Poland (6.8% vs. 6.4%), Poland’s MPC should not go for a 50bp interest rate hike because of inflation.

Inflation is expected to exceed 7% in the next few months and also the newly published NBP projection should point to a higher inflation trajectory in 2022 compared to the last forecast.

In Czechia, given the weaker than expected GDP growth flash estimate for 3Q, 2021 and persisting supply-side issues, we expect the CNB to slow down its pace of tightening and opt for a 50bp rate hike on Thursday.

At the beginning of the week, PMIs for October will be published in Czechia, Hungary, and Poland. From macro releases, September retail sales for Czechia, Hungary, Romania, and Slovakia may show some moderation of y/y growth, while September industrial production likely contracted in Hungary due to supply chain issues and the high base from a year ago.