Erste Bank Research Team
Erste Bank
On the radar
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Poland’s central bank kept the policy rate unchanged at 5.75%.
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There are no other releases scheduled for today.
Economic developments
President Donald Trump has announced new import tariffs on all goods entering the US, in the biggest upheaval of the international trade order since the aftermath of World War Two. However, the chaotic approach of Trump’s administration has sent measures of trade policy uncertainty skyrocketing to record high levels already prior to Wednesday’s announcement. Such instability regarding the business environment alone imposes significant economic costs by making spending, investment, hiring, and transport decisions harder. The tariffs Trump announced will differ country by country. A 20% tariff on EU imports will take effect on April 9th , with the EU promising to retaliate. Apart from that, a 25% tariff on vehicles is in place as of April 2nd . Within the region, Slovakia is the most exposed to the automotive trade restrictions. Nevertheless, the 20% duty is negative for the growth in the whole CEE. Although direct impact from the US tariffs could be rather contained, the indirect impact is likely to shave off growth prospects in the whole Eurozone.
Market developments
In Poland, the Monetary Policy Council decided to maintain the key interest rate at 5.75% on Wednesday. Our focus, however, was on the press statement. While the MPC appears cautious, the tone and wording changes in the statement suggest a more dovish sentiment. The press statement mentioned weakening economic conditions and the downward surprises in headline inflation were acknowledged. The statement also omitted the sentence regarding a medium-term return of inflation to the target under unchanged monetary policy, which we interpret as another dovish signal. CEE currencies have been relatively strong. The long-term yields have been lower this week but the 10Y yields in the US moved by 20 basis points down after announcement and bond market in the region is likely to be affected further.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
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