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Macro week ahead

As usual, the last week in the month is light in terms of economic data, and this week is not to be an exception. Central bankers’ decisions across CEMEEA countries will likely be in the spotlight over the coming days.

In Hungary, the NBH is likely to keep cutting the benchmark interest rate ahead of the elections – particularly in light of the supportive inflation environment. The February CPI report surprised the market, with a 0.1% YoY print despite an unfavourable base effect, as consumer demand in the country remains meagre. Moreover, indirect-tax-adjusted core inflation, demand-sensitive inflation and sticky-price inflation all guide for flat or slower price growth. Nevertheless, the regulator could again advocate caution over global market turbulence.

In the Czech Republic, the recent speech by the CNB governor Miroslav Singer left little intrigue for the forthcoming meeting. He committed to maintaining the weak crown (above 27 against the euro) to boost the economy amid an ultra-low interest rate backdrop and added that the CNB is ready to use verbal interventions if needed.

South African Reserve Bank governor Gill Marcus said that any additional tightening is highly data-dependent and in any case should be gradual. So we believe that this week the South African MPC will deliver no interest rate change, or a smaller (25bp) rate hike in order to preserve credibility and contain medium-term inflation expectations.

Weekly CPI in Russia could bring another uptick in the headline reading on the back of sugar, vodka and gasoline price growth.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst


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