Although the Czech koruna temporarily returned below EUR/CZK 25.90 yesterday (probably due to local exporters’ hedging), the pair eventually closed above the 26.00 level (see the chart below) and, technically speaking, opened a room for further depreciation towards 26.05 or 26.10. In contrast, the Hungarian forint supported by a better than expected GDP growth in 2013Q1 dipped below the support at EUR/HUF 293.
In the afternoon, investors’ attention turned to Polish inflation in April. Headline inflation fell to 0.8% Y/Y (0.4 % M/M), which was a touch higher than both we and markets had expected. Regarding structure, the main surprise was a sharp increase in prices of recreation and culture (2 % M/M). More importantly, one of mild hawks among Polish central bankers, Anna Zielinska-Glebocka, indicated she would probably support a 25 bps rate cut. This is relevant because she strengthened thereby earlier dovish comments of Adam Glapinski, who said on Monday that the central bank (NBP) could cut interest rates in June. Taking into account that at least three additional members of the 10-strong Monetary Policy Council, including NBP president Belka (whose vote weight doubles if voting results in a tie), are likely to support the cut, likelihood of additional easing at the June MPC meeting significantly increases.