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EMERGING MARKETS: CB Decisions from Czechia, Hungary and Mexico Next Week

EMERGING MARKETS
BulletEM BulletEmerging Market News
  • Hungary (Tue): The NBH is expected to resume its easing cycle with a 25bp cut to the base rate, taking it to 6.50%, following a pause at the August meeting. Since the previous meeting, the Fed has begun its easing cycle with a bold 50bp cut while the forint has performed on relatively stable footing, offering NBH officials greater room for manoeuvre. The Council is likely to stick to a relatively cautious tone, but could signal the possibility of another rate cut before year-end.
  • Czechia (Wed): The CNB is expected to deliver another 25bp rate cut next week, having slowed the pace of monetary easing in August, following a series of four 50bp cuts earlier this year. Inflation is within the CNB's tolerance band, with central bank staff expecting it to stay close to the +2% target over the next two years, but the Bank Board remains alert to upside risks. Note that next week's meeting takes place on a Wednesday rather than Thursday.
  • Mexico (Thu): Banxico is expected to cut the overnight interbank interest rate by 25bps to 10.50%, supported by further progress on the disinflation process and concerns surrounding growth. Domestic uncertainty related to Morena’s constitutional reform initiative has placed pressure on MXN, which could become a concern should there be a further deterioration. However, the Fed’s bolder move to initiate its easing cycle should provide the Banxico committee with the required flexibility to continue easing.
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  • Hungary (Tue): The NBH is expected to resume its easing cycle with a 25bp cut to the base rate, taking it to 6.50%, following a pause at the August meeting. Since the previous meeting, the Fed has begun its easing cycle with a bold 50bp cut while the forint has performed on relatively stable footing, offering NBH officials greater room for manoeuvre. The Council is likely to stick to a relatively cautious tone, but could signal the possibility of another rate cut before year-end.
  • Czechia (Wed): The CNB is expected to deliver another 25bp rate cut next week, having slowed the pace of monetary easing in August, following a series of four 50bp cuts earlier this year. Inflation is within the CNB's tolerance band, with central bank staff expecting it to stay close to the +2% target over the next two years, but the Bank Board remains alert to upside risks. Note that next week's meeting takes place on a Wednesday rather than Thursday.
  • Mexico (Thu): Banxico is expected to cut the overnight interbank interest rate by 25bps to 10.50%, supported by further progress on the disinflation process and concerns surrounding growth. Domestic uncertainty related to Morena’s constitutional reform initiative has placed pressure on MXN, which could become a concern should there be a further deterioration. However, the Fed’s bolder move to initiate its easing cycle should provide the Banxico committee with the required flexibility to continue easing.