President Donald Trump's initial weeks in office have set the stage for potential new tariffs targeting the European Union, adding uncertainty to already volatile markets. As consumer confidence in Central and Eastern European (CEE) countries hits lows reminiscent of late 2023, financial markets brace for the impact of these developments.
The Polish central bank is poised to announce its key interest rate decision today, a move closely watched by investors. This decision comes as Croatia boldly enters the international bond market with a substantial EUR 2 billion euro-denominated bond issue, attracting books in excess of EUR 5 billion. The 12-year papers were sold at MS+90bps, a competitive rate down from the initial guidelines of MS+120bps.
On the currency front, the US Dollar struggles to attract buyers amid growing expectations of a Federal Reserve rate cut. This weakness lends support to the EUR/USD pair, while the GBP/USD extends its upward momentum beyond 1.2500 during Wednesday's European session. Meanwhile, CEE currencies have shown resilience, strengthening against the euro on Tuesday and bringing EURHUF down to 407—a level last observed in November 2024.
Consumer confidence across the CEE region has been on a steady decline since mid-2024, with Romania witnessing the most significant drop in January. Long-term yields have seen marginal declines this week in most CEE countries, reflecting cautious investor sentiment.
Looking ahead, all eyes are on Governor Glapinski's press conference scheduled for Thursday, where he is expected to provide insights into potential monetary easing measures later in 2025. This comes as market participants eagerly await signals that could influence future economic policies.