CEEMEA Blog: CEE: diverging central bank paths

Research evidence excerpt

CEEMEA Blog: CEE: diverging central bank paths

Deutsche Bank

Research

Emerging Europe Emerging Markets Date

Czech Republic 19 June 2026

Hungary CEEMEA Blog

CEE: diverging central bank paths

Twisha Roy

The NBH is due to meet for its June MPC meeting next week. Given the downside

Economist

surprise in May inflation, in combination with continued HUF strength and sharp +44-20-754-52413

decline in global energy prices, we believe that a rate cut at the meeting looks like

a done deal. In our view, the question is not whether the NBH will ease policy rates

or not, but by how much – and we expect both 25bps and 50bps rate cuts to be on

the table. In our baseline scenario, we expect the NBH to maintain its cautious

approach and opt for a 25bps rate cut to 6.00% at this meeting, while also keeping

the door open for further rate easing ahead. That said, a more aggressive 50bps rate

cut (though less likely) should not be fully ruled out. We expect the NBH to continue

gradual rate easing over the next few months, reaching a terminal rate of 5% in

early 2027.

On the other hand, the CNB this week became the second major central bank in

the CEEMEA region (after the SARB) to in fact hike policy rates. The central bank

Board decided to increase policy rate by 25bps to 3.75% - this was in line with our

expectations and BBG consensus. Ahead of the meeting, we had highlighted that

the decision was likely to be close and that a split vote was possible – indeed the

decision to hike the policy rate was delivered via a 6-1 vote, with one Board member

voting to keep policy rate unchanged. Given improvement in the forward-looking

inflation outlook this week, we believe that the CNB can keep policy rates

unchanged at these levels this year.