CEE Macro Weekly: Holding steady on shaky ground

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TOP MACRO THEME(S):

• The MPC’s autumn mood is not hawkish (yet?) (p.3) – Polish MPC left rates unchanged at 3.75%, while Governor A.Glapinski struck a clearly hawkish tone, stressing that the Council stands ready to raise rates if inflation risks intensify. Nonetheless he sees no need for an immediate hike in the absence of second-round effects.

WHAT ELSE CAUGHT OUR EYE:

• ROM: As expected, the NBR kept interest rates unchanged, with the policy rate remaining at 6.50% since August 2024. Although in August CPI inflation fell to 6.2% y/y from 8.2% y/y in July, mainly due to base effects related to last year’s electricity price liberalisation and VAT and excise duty hikes, the NBR expects inflation to rise again towards the end of 2026. The increase is expected to be driven mainly by higher fuel, energy, and other commodity prices, including agricultural and food commodities, amid the prolonged conflict in the Middle East and this year’s severe drought, as well as by RON depreciation. The Bank also highlighted persistently elevated uncertainty related to the unstable domestic political situation and potential future measures needed to continue fiscal consolidation. Significant risks to the medium-term outlook for economic activity and inflation also stem from the war in the Middle East and the energy crisis. In addition, monetary policy decisions by the Fed and ECB, as well as the policy stance of other CEE central banks, remain relevant for the NBR. We expect the NBR to keep rates unchanged through the end of this year and to resume monetary easing in 2027.
• ROM: S&P affirmed the long-term foreign-currency sovereign rating at “BBB−” with a negative outlook. Ahead of the decision, there had been concerns that the agency might downgrade the rating to below investment grade due to the prolonged political instability – with no government in place since May 2026 – which threatens the continuation of fiscal consolidation. The agency stressed that, despite the political instability, fiscal consolidation is under way and that ad hoc legislative measures have helped to unlock around 90% of RRF funds. However, S&P warned that a prolonged political crisis could lead to a rating downgrade.
• ROM: President N.Dan announced the nomination of non-affiliated diplomat Luca Niculescu as prime minister designate, marking the fourth attempt to form a government since the dismissal of the Bolojan cabinet through a no‑confidence vote in May.
• POL: Poland's lower house of parliament, the Sejm's Constitutional Accountability Committee, has adopted a report on a preliminary motion to hold Poland's central bank NBP Governor A.Glapinski constitutionally accountable before the State Tribunal. The Sejm will now vote on the committee's report. This can take place no earlier than 21 days after all MPs have been informed of its contents.

THE WEEK AHEAD:

• This week, the focus will be on September inflation data – second, detailed estimates from Poland and Czechia, including core inflation, as well as the first reading from Romania, where we expect inflation to edge up from 6.2% y/y in August. We will also see Romania’s trade data, as well as August BoP from Poland and Czechia.