Next Week's Key Events In EMEA And Latam

A packed calendar in EMEA next week - the focus will be on Turkey's and Russian's central bank meetings which should result in a cut following lower than expected inflation numbers. Also, keep an eye out for Czech industrial production and inflation reading from Hungary.

Turkey: Expect a cut

Given the downside surprise in November inflation, improving inflation expectations, currency stability and low-interest-rate environment globally, we expect the central bank to act, with a modest 100 basis point rate cut, pulling the policy rate down to 13%. Read our full preview here.

Russian's central bank likely to cut

In November, CPI continued to underperform expectations (3.5% YoY) while inflationary expectations in November reached their lowest levels since April 2018, so it is possible that December CPI will approach the lower bound of the CBR's target of 3.2-3.7%, building the case for a 25 basis point cut in the key rate in December.

With few internal obstacles, only a negative external surprise (including a hawkish Federal Reserve) could prevent the CBR from cutting.

Hungary: All eyes on inflation

The most important release in Hungary next week is the inflation reading. With previous price increases in energy products falling out of the base, there is upward pressure on the year-on-year headline rate. Against this backdrop, we see fuel prices along with more expensive food items pushing the headline reading up 3.4% from a year ago. As inflation in market services is expected to strengthen further, core inflation could rise to 4.1% year-on-year. However, as tax effects remain significant, core inflation excluding indirect taxes is expected to come in at 3.8%, an 11-year high. Separately, we expect the budget to post a notable deficit in November due to seasonal factors, but the year-to-date reading should remain significantly better than planned.  

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