Central European Daily

Although some kind of armed intervention against separatist militias in East Ukraine could be expected, fears of further conflict escalation and uncertainty surrounding Russia’s true stance triggered further sell-off in Hungarian and Polish markets. While the koruna barely moved, the zloty fell by about 0.2 % and the forint lost more than 0.5% vs. the euro. Also Hungarian stocks underperformed its peers. Unlike in major European countries, prices of Hungarian government bonds fell and the 10Y yield rose by 3 bps yesterday (or by 13 bps since last Tuesday). Still, we expect the Hungarian central bank to cut its key interest rate to 2.50 % unless the forint returns above EUR/HUF 315 in the next two weeks (the MNB meeting is scheduled for 29th April).