IMF considers talks with Hungary still (only) informal

Headlines: 
 - IMF considers talks with Hungary still (only) informal 
 - Polish inflation set to decelerate at the end of the last year

Central European currencies appreciated solid debt sales both in the region as well as in eurozone (Italy, Spain). The Hungarian debt auction attracted sufficient demand while the yields around 9% were off the highs seen last week. But the gains of Hungarian forint were limited as the uncertainty around any deal with IMF persists. Christine Lagarde, IMF chief, said that talks with Hungary have been (only) informal so far. The IMF continues to call for “tangible” steps by Hungary that would change some of the most problematic policies and open doors to (real) official talks.

Concerning the day ahead the Polish inflation for December could attract some attention. We believe it decelerated somewhat in the last month of 2011, falling to 4.6%, after the November’s unexpected rise to 4.8% y/y. Nonetheless, it still remains well above the central bank’s target (2.5%), and the price rise for the whole of 2011 may be up to 4.2%. This time, the negative effect of food and transport prices should primarily stem from the weakened zloty, and might be largely eliminated by the increased comparative baseline. In addition, seasonally falling clothing and shoe prices should also curb inflation.