Europe, Middle East and Africa Emerging Markets Weekly

Research evidence excerpt

J P M O R G A N

Europe Economic Research

10 August 2026

Europe, Middle East and Africa

Emerging Markets Weekly

CEE: Common inflation pressures, different policy directions

The latest round of inflation releases continues to paint a picture of sticky

underlying price pressures, with core CPI metrics running at around 3%, but with

headline inflation generally below that level due to benign food price dynamics.

The contrast between resilient services inflation and negative tradable goods

inflation remains intact and, if anything, is becoming more pronounced. Central

bank stances, however, continue to differ, reflecting in part different starting

points.

The CNB has already delivered one rate hike and continues to debate whether and

when to follow up with a second, although there appears to be little urgency. The

NBP shares a similar policy rate (3.75%) but lacks the hawkish inclination and has

instead flirted with the idea of cuts, a view that we do not think is supported by the

data. The NBH is in a different position altogether. With a higher policy rate

(5.75%) and a 3% inflation target, it has considerably more room to ease than its

regional peers. As a result, it appears comfortable continuing to cut rates even as

DM central banks are expected to move in the opposite direction in the months

ahead.

Czech: CNB stays put as services re-accelerate

The July CPI flash release confirmed that underlying inflation pressures remain

uncomfortably firm. Headline inflation edged up to 1.7%oya from 1.5%,

remaining below the CNB’s 2% target as weak food and energy prices continued

to offset elevated domestic price pressures.

The increase was broad-based, with our preferred proxy for core CPI accelerating

to 3.2%oya, suggesting CNB core likely rose to around 2.9%oya from 2.8%.

Services inflation also re-accelerated to 4.7%oya from 4.5%, adding to evidence

that underlying inflation remains sticky and continues to test the CNB’s comfort

zone.

Despite this backdrop, the CNB left rates unchanged at 3.75% the following day,

with the decision receiving unanimous support from all seven Board members. The

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