WARSAW: Central European currencies were mostly stable on Friday as economic data provided further signals that inflation pressure was easing in the region for now.
Stock markets were mixed with Budapest’s main index down about 1 percent, while Romania’s BETI index was up 0.7 percent.
Czech producer prices fell 0.3 percent year-on-year in February, data showed, missing expectations for a rise and showing the first drop since the end of 2016.
Analysts said the data confirmed that the central bank will not hurry in delivering the next rate hike.
“Producer price development supports the idea the Czech National Bank will (…) not rush with raising rates, although in my view a rise in the second half remains in play,” said Radomir Jac, chief economist at Generali Investments CEE.
Financial markets do not expect the next 25 basis point rate hike until the end of the year.
The Czech central bank has lifted rates three times since August, becoming the first in the EU to begin reversing loose policy last year. Its key rate stands at 0.75 percent, half of the Polish central bank’s benchmark rate.
By 1106 GMT, the Czech crown was steady at 25.425 to the euro, supported by data showing a current account surplus of $1.40 billion in January.
The Polish zloty held near a three-month low at 4.214.
The currency has weakened since the central bank governor surprised markets last week by saying he saw no reason to hike rates until the end of 2020 given current forecasts, much longer then expected by analysts.
Data on Friday showed that Polish corporate wages grew less than expected in February, also confirming a sustained rise in employment by companies.
The labour market remains in focus for Polish policymakers, some of whom are concerned that record low unemployment and wage growth could at some point start feeding into inflation.
Markets have currently fully priced in a next Polish rate hike, by 25 basis points, in two years’ time.
Source: Brecorder.com
