CEE: Romanian Inflation Dips into Single-Digit Territory

CEE: Romanian inflation made it into single-digit territory

This morning we saw inflation in Romania fall from 10.3% to 9.44% year-on-year, below market expectations. Romania joins the Czech Republic in the single-digit inflation club within the CEE region. After today's numbers, we have the full picture for the region with 8.8% in the Czech Republic, 10.8% in Poland and 17.6% in Hungary.

Later today, the minutes of the latest Czech National Bank (CNB) meeting will be released. The board has formally lifted the FX intervention regime. So the minutes may show a discussion of FX, the impact on inflation and possibly the first discussion of rate cuts. Beyond that, the CNB will release the full inflation report including alternative scenarios, which are the board's preference at the moment. As the governor indicated, these envisage a later rate cut in the first quarter of next year instead of the fourth quarter of this year in the baseline scenario.

In the FX market, yesterday's trading despite our expectations was not negative, and despite the jump in gas prices, we saw gains across the board. The US dollar took control again and drove CEE FX to stronger levels. Today's trading should be rather quiet given that the calendar doesn't offer much.