Societe Generale strategists are flagging a widening policy divergence across Central and Eastern European central banks that could drive fresh volatility in regional currencies. Hungary is actively moving toward monetary easing while Poland and the Czech Republic maintain holding patterns with hawkish undertones, creating a three-way split in the CEE policy landscape.
This divergence marks a significant shift from the previously coordinated tightening cycles seen across the region. Hungarian authorities appear willing to cut rates amid economic slowdown concerns, while Polish and Czech policymakers are signaling reluctance to ease despite mounting pressure, likely due to persistent inflation worries or currency stability considerations.
Traders should expect increased cross-rate volatility between the forint, zloty, and koruna as these policy paths separate further. The Hungarian forint faces downward pressure from anticipated rate cuts, while the zloty and koruna may find relative support from maintained hawkish stances.
FXnCO Insight
Position for HUF weakness against PLN and CZK as the Hungarian easing cycle accelerates while neighboring central banks hold firm on rates.
Source: FXStreet