Key Events In EMEA Next Week - Saturday, May 1

Turkey and the Czech Republic should keep rates on hold for now. Releases from Hungary will reveal the extent of the damage on retail and industry, and Russian inflation will be a key one to watch.

Turkey: CBT to keep rates on hold

While the Central Bank of Turkey has been sounding more dovish lately, we expect it to remain on hold at the May MPC meeting given the worsening in inflation dynamics and challenging currency outlook. We forecast inflation at 1.7% month-on-month in April, continuing the uptrend to 17.2% year-on-year from 16.2% YoY a month ago. This is due to recent weakness in the lira, higher commodity prices, supply problems driven by tightening pandemic control measures, along with unfavourable base effects.

Czech Republic: CNB to maintain its monetary stance until 2H21

The Czech National Bank is set to stay on hold next Thursday and should reiterate its plan to start normalising policy rates in the second half of the year. The new forecast should signal a weaker pace of rate hikes, as economic developments in the first half of this year should be softer than expected in the February forecast. Still, the CNB is set to point to hikes in 2H21 and we look for two hikes in the fourth quarter, though the CNB has not excluded the potential start of hiking at the August monetary meeting.

Russia: Trimming of FX purchases, and inflation data to reinforce hawkish stance

The Russian Finance Ministry is likely to announce the trimming of its FX purchases from US$2.4 bn in April to US$2.0 bn in May, in line with some correction in the oil prices we’ve seen over the past month. However, the biggest issue for the ruble is not FX purchases but a fast pick up in imports and capital outflows (which are only partially politics-related). In addition, next week, April CPI will be reported, with the annual rate almost certainly decelerating from March’s 5.8% YoY peak on a higher base effect, but the April result still looks as though it could overshoot our 5.5% YoY expectations, reinforcing the Bank of Russia’s hawkish stance.

Hungary: Possible stagnant PMI reading and pessimistic retail and industry figures

With supply chain issues causing stoppages in Hungary and a reopening having begun, the manufacturing PMI will be shaped by both negative and positive forces. The result could be stagnation. We will also see data on industry and retail sales in March and are bracing for a bad outcome. The retail sector’s performance was probably held back by a new round of containment measures in March, with non-essential shops being closed. Industry faced supply chain disruptions amid a shortage of microchips and semiconductors and the proverbial icing on the cake was the Suez Canal incident, causing further delays in input shipments.

EMEA Economic Calendar

ING, Refinitiv

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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