CEE Macro Weekly: CEE at different stages of the business cycle

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TOP MACRO THEME(S):

• Poland’s macro picture is getting brighter (p.3) – GDP growth in 3q25 accelerated to 3.7% y/y, ranking Poland among the best performers in the EU (EU avg: 1.6% y/y). Data are consistent with the scenario of GDP growth at 3.5% y/y in both 2025 and 2026. Czechia also did quite well, which was not the case for Romania and in particular Hungary.

WHAT ELSE CAUGHT OUR EYE:

• ROM: The NBR, in line with expectations, kept interest rates unchanged, including the key rate at 6.50%. More than a year has passed since the last rate cut, and the next one (in our view) may not come before 2q26 – elevated inflation and the prospect of it remaining at a high level in the coming months prevent a loosening of the monetary policy stance. At its meeting, the Bank’s Board reviewed a new projection, which assumes that inflation will edge down over the next three quarters, but its level will be higher than in the previous forecast due to stronger-than-expected effects of the expiry of the electricity price freeze and increases in VAT and excise tax rates. In 3q26, inflation is expected to fall sharply (due to base effects), and in 1q27 it is projected to return to the tolerance band of deviations from the target (2.5% ± 1pp).
• POL: The S&P agency has affirmed Poland’s long-term foreign currency rating at “A-” and left its stable outlook unchanged. Earlier, the Fitch and Moody’s agencies decided to downgrade Poland’s rating outlook. S&P assessed that the stable outlook reflects a balance between the country’s long-term economic growth prospects and the risks associated with rapidly rising debt. The agency assessed that Poland’s credit rating could be downgraded if, among other factors, medium-term economic growth prospects were to deteriorate significantly, combined with macroeconomic imbalances or a possible escalation of the war in Ukraine. A rating upgrade would be possible if fiscal deficits were brought down, with positive supporting factors including credible commitments to prudent fiscal policy and the maintenance of EU fund inflows. We believe that the agency’s current decision is largely based on the assumption of a high pace of economic growth. In a slowdown scenario, Poland may be more vulnerable to risks, and reduced market optimism could potentially force stronger fiscal consolidation. In our view, S&P’s decision is not only a positive signal for the markets (which had feared an outlook downgrade), but also an incentive for the government to intensify efforts toward reducing the deficit.
• POL: The NBP has published the MPC’s opinion on the 2026 budget act. The macroeconomic assumptions of the budget (GDP growth in 2026: 3.5%, average annual CPI inflation in 2026: 3.0%) were deemed by the Council to be realistic and close to NBP’s November projection. In light of NBP’s forecasts, the general government sector deficit may turn out higher than assumed in the explanatory memorandum to the draft (6.5% of GDP in 2026).

THE WEEK AHEAD:

• The key focus will be Tuesday’s decision of the Hungarian central bank. Despite rising political pressure, the MNB maintains that a cautious approach to monetary policy remains necessary; therefore, we expect interest rates to be kept unchanged. The week will begin with the release of core inflation data from Poland. The remaining figures will be of secondary importance – Czech PPI inflation and consumer sentiment in Poland.