ING strategist Frantisek Taborsky reports that Romanian inflation has eased, with headline inflation dropping from 10.4% to 8.2% year-on-year, marking the lowest level since mid-2025. This decline is primarily attributed to base effects, as month-on-month momentum does not indicate a clear slowdown. Despite the easing inflation, ING expects the National Bank of Romania to refrain from cutting rates before early 2027 [1].
Across Central and Eastern Europe (CEE), the region experienced a sharp rates sell-off at yesterday’s open, particularly in the Czech market, driven by US–Iran geopolitical tensions. Signs of US-Iran negotiations later brought some relief, but hawkish pricing persists, with nearly three rate hikes priced in for the Czech Republic and two for Poland [1].
ING notes that higher yields should provide FX protection, supporting a recovery in the Czech Koruna (CZK) and Polish Zloty (PLN), which saw the sharpest rate moves. In contrast, the Hungarian Forint (HUF) remains under pressure due to local energy supply concerns [1]. The strategist suggests that the market may have overreacted in pricing tightening, but expects higher rates to stabilize regional currencies, as observed at the onset of the conflict [1].
No forward-looking analyst opinions beyond ING’s expectation of continued inflation decline in Romania and a delayed rate cut are provided. The market calendar is quiet, with core markets and geopolitics remaining the primary focus [1].
CONCLUSION
Geopolitical tensions have triggered a sharp rates sell-off in CEE markets, but ING expects higher yields to support FX recovery for the Czech Koruna and Polish Zloty. The Hungarian Forint remains vulnerable due to energy concerns, while Romanian inflation is easing but rate cuts are not anticipated before early 2027. Overall, ING sees the market as having priced in too much tightening, with stabilization likely as geopolitical risks moderate.