On the radar
Today, the Hungarian central bank holds a rate-setting meeting and another cut is expected.
Czech PPI rose from 0.2% y/y in October to 0.8% y/y in November.
Core inflation in Poland fell to 7.3% y/y in November, while headline inflation is at 6.5% y/y.
Tomorrow, Poland will release a slew of data: November industrial production growth, employment and nominal wage growth, and PPI index.
Economic developments
The job vacancy rate in the whole economy decreased last year (3Q23 compared to 3Q22) in all CEE countries except Croatia. In Croatia, the rate increased from 1.2 % to 1.6 % over the last year, which means that the share of vacant jobs is higher due to a visible increase in job offers over the period. In contrast, the Czech Republic, where the vacancy rate fell the most in the region, experienced the opposite trend. The number of job vacancies fell significantly, while, interestingly, the number of occupied jobs increased.
In other CEE countries, the number of job vacancies also fell. However, even if there are fewer job vacancies, this does not necessarily mean that people will become unemployed. On the contrary, unemployment rates remain at or near historically low levels despite the economic downturn.
Market developments
CEE currencies weakened against the euro at the beginning of the week, while long-term yields rose in most of the region. Today, the Hungarian central bank holds a rate-setting meeting and we expect another 75 bps cut, bringing the key rate to 10.75% by the end of the year.
We also expect monetary easing to continue in 2024, with the key rate falling to single digits in the coming months. Poland is preparing a new budget plan for 2024 after the change of government, and according to press releases, the deficit will increase to PLN 180 billion, compared to the previous government’s plan of PLN 165 billion. The increase in the deficit is a result of the desire to fulfill election promises.
