Ongoing monetary easing in CEE

Monetary easing is underway in all CEE countries but Poland. Since the beginning of the year, the Czech central bank has lowered the key policy rate by 250 basis points, including yesterday's move. Hungary implemented cuts worth 425 basis points as the key interest rate decreased from 10.75% at the beginning of 2024 to 6.5% at the last meeting on Tuesday. Latecomers to monetary easing such as Romania and Serbia also lowered the key policy rates by 50 and 75 basis points, respectively, which is similar to major central banks such as the ECB and FOMC. Only Poland has kept the key policy rate unchanged this year, and we expect March 2025 to be the earliest date when the interest rates in Poland could change. In other countries, we still see room for monetary easing this year and throughout 2025. Inflation is expected to fall moderately further next year, while weakening growth prospects will diminish inflationary pressure, making central banks more comfortable with further steps.