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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CEE
- National Bank of Bulgaria decided to leave its policy rate unchanged at 0% despite the surge in inflationary pressures.
- As for Serbia, we have seen that the NBB has not followed its CEE peers in recent months, where central banks have been raising rates aggressively to curb inflationary pressures.
- As a reminder, Bulgaria CPI inflation surged to 9.1% in January, its highest level since November 2008.
- The chart below shows the strong divergence between NBB and National Bank of Serbia policy rates and the rest of the CEE central banks' rates in the past year.
- Policymakers are choosing to keep interest rates unchanged for two main reasons:
- First, keeping rates low could limit the downside risks on the economic activity. Bulgaria (as Serbia) is partly relying on its CEE peers' 'effort' (NBP, CNB and NBH), hoping that the gradual decline in inflation in H2 2022 will also have an impact on the domestic inflation.
- Second, the Bulgarian Lev (BGN) is pegged to the EUR at 1.9560, therefore the NBB may mirror the ECB policy outlook in order to avoid currency interventions as rising interest rate differential will drive BGN higher (vs. Euro).
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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