CEE MARKETS-Crown hits nearly 2-year low as inflation drop boosts rate cut bets
15/02/2024 09:39
By Boldizsar Gyori
BUDAPEST, Feb 15 (Reuters) - The Czech crown fell to a
23-month low versus the euro on Thursday after data showing a
sharp drop in January inflation led to more bets on a steep fall
in interest rates.
Investors were also taking in Polish inflation data while
waiting for U.S. retail sales figures later in the day to gauge
the potential timing of a first rate cut by the Federal Reserve.
Czech inflation in January fell to its lowest since March
2021, coming in at 2.3% year-on-year from nearly 7% in December.
The closely watched data comes after the Czech National Bank
started easing policy in December with a 25 basis point (bp)
rate cut and followed last week by a sharper 50 bps move.
"The noticeable slowdown in inflation in January opens space
to an even sharper reduction of interest rates in March," said
Patrik Rozumbersky, a UniCredit economist, adding a 75 bp move
was in play.
The Czech crown EURCZK= was down 0.1% at 25.44 to the euro
at 0848 GMT, after hitting a 23-month low of 25.52.
Short-end market rates fell around 15 bps.
Central bank officials maintained a hawkish tone after the
data, with Governor Ales Michl saying inflationary risks like a
weaker crown and budget deficits remained, while core inflation
was still high.
"Those are arguments to lower interest rates carefully and
why we can stop the process of lowering rates whenever," he said
on social media platform X.
In Poland, where inflation fell more than expected to below
4%, the zloty EURPLN= also weakened 0.1%.
Central bank Governor Adam Glapinski said last week policy
could remain unchanged for the rest of the year amid "very high
uncertainty" over the outlook for inflation.
"(The zloty) will be subject to global trends. These, in
turn, will be shaped today by the reading of American retail
sales. A strong reading will confirm the market's belief about
June as the month of the Fed's first interest rate cut and thus
maintain its pro-dollar stance," Bank Millennium said in a note.
Two of nine Hungarian rate-setters backed a
larger-than-consensus 100-bp rate cut at the central bank's Jan.
30 policy meeting, minutes of the meeting published on Wednesday
showed. The forint EURHUF= traded sideways at 388.75.
January's split was the first among policymakers since May
2016. The next rate meeting is due on Feb. 27.
CEE SNAPSHO AT
MARKETS T 0948
CET
CURRENC
IES
Latest Previou Daily Change
s
bid close change in 2024
EURCZ Czech
EURHU Hungary 0 0
EURPL Polish
EURRO Romania
EURRS Serbian 0 0
Note: calculated from 1800
daily CET
change
Latest Previou Daily Change
s
close change in 2024
.PX Prague .PX 1481.64 1479.23 +0.16% +4.78%
00
.BUX Budapes .BUX 65742.7 64999.4 +1.14% +8.45%
t 4 5
.WIG2 Warsaw <.WIG20 2348.35 2347.65 +0.03% +0.23%
0 >
.BETI Buchare .BETI 15676.1 15693.3 -0.11% +1.98%
st 7 3
Spread Daily
vs change in
Bund
Czech spread
Republi
c
CZ2YT 2-year s
CZ5YT 5-year s
CZ10Y 10-year s
Poland
PL2YT 2-year s
PL5YT 5-year s
PL10Y 10-year s
FORWARD
3x6 6x9 9x12 3M interbank
Czech
Hungary
Poland
Note: are for ask
FRA prices
quotes
********************************************************
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(Reporting by Boldizsar Gyori in Budapest; Editing by Mark
Potter)
((boldizsar.gyori@thomsonreuters.com))
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