CEE Weekly Bond Markets Outlook

27 Ianuarie 2012

RAIFFEISEN BANK S.A.

 

Highlights

Poland – The Monetary Policy Council seems to be turning hawkish as domesticinflation remains above 4.0% yoy. Even though rate hikes are unlikely, some investors may be discouraged from buying Polish bonds – especially ones with shorter maturities. Thus, the 10-2 spread will probably narrow over short to medium term.

Hungary – The Monetary Council left the key interest rate unchanged at 7% on Tuesday. The market had been expecting a continuation of the rate hike cycle (November +50bp; December +50bp), but markets had calmed quite a bit recently and therefore there was some uncertainty about the outcome of the rate-setting meeting. According to Governor Simor, the decision was a close call.

Czech Republic – Next week’s CNB policy meeting will be the main domestic event. It is almost certain that the CNB will leave the key interest rate unchanged at the historically low level of 0.75%. Nevertheless, the comments and the new forecast will be important. It is likely that the GDP growth forecast will be lowered, while CZK is weaker and current inflation is higher.

Romania – The NBR cut the monetary policy rate by a total of 50bp at the last two monetary policy meetings (in November and January). We think the current context will help the central bank to cut the key rate by another 25bp at next week’s meeting (on 2 February), although we did not previously envisage such a move in our baseline scenario.

Croatia – On 26 January Croatia's central bank lifted the mandatory reserve requirement for commercial banks by one percentage point to 15% to halt the depreciation pressures. We can expect the EUR/HRK to stabilise and interest rates on the money market and probably T-bill yields at the next auction to rise.

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The tricky lag LUCIAN CROITORU Adviser to the Governor - BANCA NAŢIONALĂ A ROMÂNIEI Lucian Croitoru, Adviser on monetary policy issues to the National Bank of Romania Governor, talks about the NBR’s next moves and explains why the decrease ofthe policy rate hasn’t been reflected into lower interest rates on bank loans. mai mult... The turnaround CRISTIAN SPORIS Secretar de Stat - MINISTERUL ECONOMIEI ŞI FINANŢELOR Cristian Sporis, Secretary of State at the Ministry of Public Finance, in charge with the national treasury and public debt, explains how the state managed to borrow money at the lowest costs in the last seven years and how it turned from a clear market taker into a player with a strong position on the market. mai mult...