KBC Market Research Desk
KBC Bank
An impact of much lower than expected inflation in Hungary proved only to be short-lived and the forint was only little changed yesterday.
As for the Czech inflation figures for September, they showed a slightly faster year-on-year price growth than in August (0.4% vs. 0.3%). In month-on-month terms, prices fell by 0.2% mainly thanks to lower gasoline prices and seasonally cheaper vacations. Even stronger decline was mitigated only due to rising prices of some food items and seasonally more expensive clothes and footwear. Price growth thus remains well below the inflation target of the Czech National Bank as well as its latest forecast.
Regarding our outlook, we expect only a gradual acceleration of inflation in the months and quarters ahead. For example, we expect energy prices will continue to drag inflation down in 2016. On the other hand, housing, cigarettes and alcohol and food prices should contribute to price increase.
In any case, we currently expect inflation returning to the target only in 2017 which should allow the central bank to stick to its intervention policy and to keep zero lower rates at least to the latter part of the second half of 2016.
| Currencies | % chng | |
| EUR/CZK | 27.13 | 0.0 |
| EUR/HUF | 311.3 | -0.3 |
| EUR/PLN | 4.22 | -0.4 |
| EUR/USD | 1.13 | 0.4 |
| EUR/CHF | 1.09 | -0.3 |
| FRA 3x6 | % | bps chng |
| CZK | 0.25 | 0 |
| HUF | 1.32 | 0 |
| PLN | 1.71 | -1 |
| EUR | -0.05 | -1 |
| GB | % | bps chng |
| Czech Rep. 10Y | 0.64 | -1 |
| Hungary 10Y | 3.23 | -8 |
| Poland 10Y | 2.67 | 0 |
| Slovakia 10Y | 0.84 | -1 |
| CDS 5Y | % | bps chng |
| Czech Rep. | 50 | 0 |
| Hungary | 167 | 0 |
| Poland | 77 | 0 |
| Slovakia | 49 | 0 |
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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