CEE Macro Weekly: Consumer power took center stage in 2024

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TOP MACRO THEME(S):

  • Unspectacular GDP data (p. 3) – Full year GDP readings in CEE-3 brought mixed results, with a slight positive surprise in Poland and a relatively disappointing reading for Hungary.

WHAT ELSE CAUGHT OUR EYE:

  • POL: Comments from several MPC members point to a relatively broad dovish fraction that sees a space for rate cuts in 2025 (in contrast to Governor A.Glapinski’s view who sees the possibility of rate cuts only in 2026). L.Kotecki assessed that macroeconomic indicators do not signal demand pressure and in these conditions, he sees room for rate cuts in 2025, even by 100bps. W.Janczyk also sees a similar room for cuts (50-100bps) in 2h25. I.Duda said that if the data indicate a lasting decline in inflation to the target in the medium term, it will be possible to return to the discussion on interest rate cuts. Last week H.Wnorowski pointed out that the scenario of monetary easing in 2025 is realistic, but the reductions could take place no earlier than in 2q25.
  • CZE: Governor of the CNB, A.Michl, said in an interview that he will present the CNB board with a plan to diversify bank’s reserves by holding up to 5% of its EUR 140bn reserves in bitcoin. Later, in a post on X, Governor toned down his comment on bitcoin investment stating that it is an idea “worth considering” and it is right now only at the stage of analysis and discussion. With regard to monetary policy the Governor stated that an interest rate cut in February is very likely. Meanwhile deputy governor J.Frait expects the CNB board to discuss between a 25bp cut or keeping rates stable. He sees some scope for further easing in 2025, but rather limited, taking into consideration that the policy rate is close to neutral level, which - according to J.Frait - may be close to 3.5% (compared to the policy rate at 4% currently).
  • HUN: The MNB left interest rates unchanged, with the main policy rate at 6.50%, while the prospect of interest rate cuts is receding as implied by the changes in MNB’s press release but also according to the recent comment by the deputy governor B.Virag (more on p.2).
  • ROM: According to a poll conducted between Jan 21 -25, C.Georgescu would be a winner of the first round of presidential elections, with 37% of votes. An independent candidate, current Mayor of Bucharest, N.Dan, would be second, while E.Lasconi, who advanced to the second round in the annulled elections would be fourth, with 7% support.
  • ROM: Ministry of Finance informed that general government deficit amounted to 8.65% of GDP, in line with recent comments, yet much higher than 7% from October revision and 5% estimated initially.

THE WEEK AHEAD:

  • Our attention will focus on the MPC meetings in Poland (Wed.) and Czechia (Thur.). In the first case we expect no change in interest rate, hoping that dovish comments coming from several MPC members could alleviate Governor’s reluctance to cutting rates in 2025. We updated our expectations for the CNB, and we see a 25pb cut at next meeting as a more likely scenario (against stable rates).  More information on other planned publications on p.4.

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analizy.makro@pkobp.pl