Current account deficits, MNB rate cut guidance

Balance of payments data out of Central and Eastern Europe this week showed unexpected current account deficits in Poland and Czechia in May, but the big picture is that external positions are generally in good health across the region. One notable exception is Romania, where the twin deficits have widened this year and the risks of a painful adjustment to rein in the country’s imbalances has increased. Meanwhile, guidance from the Hungarian central bank (MNB) suggests that next week’s interest rate decision will be a close call between a 25bp cut and a hold. We think it’s just about more likely that rates are left unchanged.

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