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CEE: Temporary Spike In Inflation Seems To Have Been Priced In By Market

EMERGING MARKETS
  • Both Poland and Hungary ticked higher in March, up to 3.2% (higher than 2.8% exp in Poland) and up to 3.7% as exp. in Hungary.
  • March Czech CPI print coming out on April 13, expected to rise to 2.3% (from 2.1% in February). Could we have a positive surprise like in Hungary? And does it matter for the CZK and the Czech 10Y?
  • It seems that market participants have already priced in the 'temporary' spike in inflation in the CEE region, therefore CBs are not in a rush to start hiking rates as tightening financial conditions could weigh on growth expectations in the coming months after the difficult first quarter.
  • CEE FX strength this month is also giving CB policymakers a 'breather'.

Source: Bloomberg/MNI

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