Thursday, December 9, 2010

Minutes from the latest MPC meeting in November


  • In Hungary, Minutes from the latest MPC meeting in November, published yesterday, revealed that a strong majority of MPC members backed the 25bp rate hike. In a decision that surprised almost all market participants, the MNB argued that both the inflation outlook and a risk assessment justified a rate hike. The Minutes also said that several MPC members agreed that further rate hikes might be needed if the inflation target were met. 
  • Lithuanian inflation in November remained unchanged at 2.7% y/y compared with the previous month. This shows that there are no inflationary pressures in the economy, as domestic demand remains weak. Read more in the flash comment here. 
  • Czech inflation for November is due to be released today. It is expected to confirm that inflation in the Czech Republic remains low.  In fact, we expect inflation in November to drop slightly to 1.8% y/y, from 2.0% y/y in October. According to our models, inflation might move even lower in December.  
  • The South African central bank will release its Quarterly Bulletin for the third quarter. At the same time, the Q3 current account will be published. We expect the current account to surprise positively and to show the current account deficit at 2.3% of GDP, compared with the consensus expectation of 3.3% of GDP. 
Trading update
  • Wednesday's trading saw yet another resumption of risk aversion, with further speculation about Chinese monetary tightening dampening the positive mood seen in the earlier part of the week. Modestly higher yields in the CEE region were met with continued softening in Turkish yields, while EMEA equities traded lower on a broad basis

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