The rally of CEE currencies which has been caused by the recent Japanese massive monetary easing has come to end yesterday. For instance, the Hungarian forint left the 5-week high but correction wasn’t immense.
Today, central banks of Poland and Hungary will be in focus. In Poland, the NBP has its rate setting meeting. After its surprisingly strong rate cut by 50 basis points in March, the MPC has made it clear that this marked the end of its monetary easing cycle, started in November last year. The data to be released this month should not change the decision by the NBP at all, and therefore we believe that the base interest rate will remain at its all-time low of 3.25%.
In Hungary the Prime Minister Orbán will nominate a new central bank deputy governor. Júlia Király, the former deputy governor, whose term would have expired in July, step down on Monday. Király, was the last member of MPC who was not appointed by Fides party and was known as Matolcsy’s opponent. Her successor will be definitely more loyal to current leadership. The most cited name of her replacement is Gyula Plesinger, former secretary of state in the Economy Ministry and current external member of MPC. Nevertheless given the fact that the response of the market to the resignation was hardly visible, we do not foresee intense reaction on the new nominee either. The same could be said about the NBH Minutes from the last meeting, which will be released today too.