As an example, Hungary’s central bank just announced that they would hold the line on their policy rate of 6.5%. This position may represent an extension of a hawkish policy stance, as the central bank assesses an evolving, uncertain domestic and global economic environment. The decision comes against a backdrop of unstable currencies and approaching economic forecasts that may affect markets across the region.
The Hungarian forint has been surprisingly strong. It continues to ride high against the euro, further strengthening consumer confidence in Hungary. Neighboring currencies, like the Czech koruna and the Polish zloty, weakened into the end of the week. This trend indicates a growing divide in prosperity among the Central European countries.
Upcoming Economic Reports
Meanwhile, Poland will join a chorus of central banks lowering their flash November inflation readings, with another marked easing of inflationary pressures on the way. This expected drop will undoubtedly offer consumers some measure of relief and may affect future monetary policy decisions as well. Looking ahead, Poland will release data for industrial production and retail sales growth in October. These figures should allow economic analysts to better evaluate the health of the country’s economic recovery.
Meanwhile, Croatia is preparing to publish its first 3Q25 GDP data. Look for big data and deep structural analysis to come soon! This data, which is first-ever of this kind, will be a very important tool in assessing the performance of different sectors in the Croatian economy. To be released next month are industry and retail performance indicators for October for Croatia, Serbia, and Slovenia. Taken together, these insights will paint a fuller picture of economic activity in the region.
Currency and Yield Movements
This is an important movement, as it will likely affect future investment strategies and borrowing costs in Hungary. At the same time, Romania had no trouble selling RON 447.76 million of 2040 government paper, on terms to yield 6.97%. The strong demand for government bonds reflects investor trust in Romania’s fiscal control.
Russia’s neighbor Slovakia also demonstrated strong demand with the sale of €1.25 billion of government securities maturing from 2028 to 2047. Indeed, the spread against Romanian 10-year yields has turned positive for the first time in nearly two years. This notable alteration foreshadows what may be a new trend of investor sentiment coming to the area.
Assessments and Future Prospects
Moody’s must consider Hungary’s rating and outlook on negative watch this Friday after market close. This step, if adopted, would represent a sea change in the country’s investment climate. Stakeholders will be watching this assessment closely, as it could impact Hungary’s borrowing costs and long-term economic viability.
Hungary has been riding a rosy wave these days. Hungary’s, Serbia’s, and Poland’s upcoming reports will laud achievements on wage growth, declines in unemployment rates and even improvements in producer prices. These metrics will reveal more detailed stories of labor market dynamics and inflationary pressures throughout Central Europe.
The European Commission has today approved Poland’s revised National Recovery Plan. After cutting the loan part of the plan, now the plan is down to EUR 54.7 billion. This approval is a welcome recognition of Poland’s commitment to maintaining prudent fiscal policy, while working to drive economic growth through targeted investments.