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CEE: HSBC Expect to See Gradual Disinflation Across CE3 in 2025

CEE
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  • HSBC have pencilled in gradual disinflation in 2025 at the headline and core level across CE3. In the Czech Republic, inflation should stabilise at close to the 2.0% target from early 2025, supporting full monetary policy normalisation with the policy rate reaching 3% at the end of the year.
  • In Hungary, they see inflation consolidating but likely just above the upper end of the target range of 2-4%. Given the government's focus on supporting growth, consumption and wage dynamics, accelerating PPI and FX pressures, they say their forecast for 100bp worth of rate cuts in 2025 is at risk.
  • In Poland, HSBC see a year of two halves with inflation elevated in H1 but correcting lower, back within the target range (<3.5) in Q4 2025. This forecast is, however, based on an assumption of a favourable electricity tariff reduction and more downside surprise from core inflation.
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  • HSBC have pencilled in gradual disinflation in 2025 at the headline and core level across CE3. In the Czech Republic, inflation should stabilise at close to the 2.0% target from early 2025, supporting full monetary policy normalisation with the policy rate reaching 3% at the end of the year.
  • In Hungary, they see inflation consolidating but likely just above the upper end of the target range of 2-4%. Given the government's focus on supporting growth, consumption and wage dynamics, accelerating PPI and FX pressures, they say their forecast for 100bp worth of rate cuts in 2025 is at risk.
  • In Poland, HSBC see a year of two halves with inflation elevated in H1 but correcting lower, back within the target range (<3.5) in Q4 2025. This forecast is, however, based on an assumption of a favourable electricity tariff reduction and more downside surprise from core inflation.