Real interest rates to remain positive

Ahead of the Hungarian central bank decision on interest rate (we expect no change of key policy rate currently at 6.50%), we look at the real interest rate development across the region. In general, both ex-post real interest rate (central bank rate and inflation rate at the same period) and ex-ante real interest rate (central bank rate and expected inflation rate in one-year) are positive in most of the CEE countries. In Czechia, ex-post real interest rate remains positive but is expected to decline while the ex-ante should remain around 1% throughout the rest of the year. Hungary, Poland and Serbia have positive ex-post and ex-ante real interest rate. In Poland, ex-post real interest rate is expected to increase, however (inflation falling faster than key policy rate). In Romania situation is the most interesting as ex-post real interest rate is expected to turn negative in the second half of the year, while ex-ante real interest rate will become positive given inflation and interest rate outlook (no cut until the end of the year).