- The Polish inflation below 4%, neutral for rate hike prospects
- CE currencies set to post further losses
On Friday, Central European currencies were trading more or less in line with the usual pattern, i.e. heightened risk aversion and the strengthening US dollar undermined the zloty and the forint whereas the Czech koruna stayed relatively calm in sight of 55 days moving average (EUR/CZK 24.823).
As regards Friday’s events, the eye-catcher was the release of inflation figures in Poland - headline inflation in March dropped to 3.9% (which was a touch lower than we expected). However, such a result was in line with expectations of both analysts and central bankers - NBP governor Belka said that the figure was neutral as far as the decision on interest rates is concerned. He stressed that industrial production (04/19) and retail sales (04/25) readings might have a significant importance. For the time being, we stick to our view that interest rates might be increased as soon as at the next meeting (05/09).
This morning, sentiment on risk remains very fragile. Moreover, for now we don’t see much of a catalyst to improve appetite for risky assets. In other words, we think that regional currencies might extend today’s early losses.