CEE Macro Weekly: Hawks, fuels and fiscal clouds

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TOP MACRO THEME(S):

• Polish MPC strikes a moderately hawkish tone (p.3) – The MPC left interest rates unchanged in September, while NBP Governor A.Glapinski struck a moderately hawkish tone at the post-meeting press conference. On the one hand, he stressed that there is currently no room for rate cuts; on the other, he saw limited justification for a potential rate hike.

WHAT ELSE CAUGHT OUR EYE:

• CEE: Inflation rose across most of CEE in August, mainly due to higher fuel prices, while food prices remained a key disinflationary factor across the region. In Czechia, inflation rose to 1.9% y/y from 1.7% y/y in July, with core inflation steady at 3.0% y/y; the data were in line with CNB expectations. E.Zamrazilova sees no case for a September hike, while J.Kubicek still favours further tightening but remains uncertain about the timing. In Hungary, inflation edged up to 1.3% y/y from 1.2% y/y, with the lower-than-expected reading supported by favourable food prices and a stronger HUF, although services inflation accelerated to 5.0%. Fuel prices rose only modestly in August, likely reflecting incomplete pass-through of late-month diesel increases and pointing to a stronger fuel contribution in September. PM P.Magyar announced targeted support for diesel users through year-end, alongside additional aid for farmers. Romania’s CPI inflation fell sharply to 6.2% y/y in August from 8.2% y/y in July, beating expectations of 6.7% y/y. The decline mainly reflected favourable base effects from the reversal of last year’s VAT and excise duty hikes, while the surprise came from food inflation, which slowed to 2.6% y/y from 5.0% y/y. Fuel inflation remained high at 17.0% y/y, while services inflation eased to 11.3% y/y from 13.7% y/y. The disinflation trend remains broadly in line with NBR forecasts.
• POL: General government debt rose to 64.6% of GDP in 2q26 from 61.6% in 1q26, with a record quarterly increase of PLN 154bn, driven mainly by higher debt of the State Treasury and the Armed Forces Support Fund. Despite rising debt, Poland is not at risk of breaching domestic prudential thresholds (55% and 60% of GDP) in 2026 and 2027.
• POL: EU-funded spending remains strong, supporting the investment rebound. Over the last 12 months, RRF grant spending (PLN 44.5bn) exceeded cohesion-funds spending (PLN 44.0bn) for the first time, while their combined scale (2.2% of GDP) is the highest since 2021, supporting expected double-digit investment growth in 2h26.

THE WEEK AHEAD:

• We expect the CNB to leave interest rates unchanged on Wednesday. Following its latest rate hike, the Bank has adopted a cautious stance, while recent comments from policymakers suggest little need for another move in September.
• On Friday evening, Moody’s will review Poland’s sovereign rating. Given the lack of a clear fiscal consolidation plan and the fact that Moody’s rating is one notch above those of Fitch and S&P, a downgrade cannot be ruled out (currently A2, negative outlook).
• Among macroeconomic releases, we will see regional balance of payments data. Poland’s busy data calendar includes final August CPI and core inflation, industrial production (Friday; we expect another solid reading), and September consumer confidence (Friday; a decline is possible due to higher fuel prices).