Erste sees Romania's inflation drop to 7.8% this week

Investing.com -- Romania is expected to see inflation fall sharply to 7.8% in July from 10.4% in June, according to Erste Bank's latest analysis of Central and Eastern European markets.

The anticipated decline reflects the removal of last year's electricity price liberalization from the statistical base. The detailed inflation data is scheduled for release this week.

Romania's second quarter GDP growth is also expected to turn positive on a quarterly basis, ending several quarters of annual contraction. The country's central bank will hold its monetary policy committee meeting this week, with interest rates expected to remain unchanged.

Poland's economy is forecast to accelerate to 3.8% year-over-year growth in the second quarter, up from 3.5% in the first quarter. Slovakia's GDP growth is expected to increase to 1.4% from 0.9% during the same period.

CEE currencies weakened slightly last week amid Middle East tensions that contributed to oil price volatility. The Czech National Bank left interest rates unchanged and signaled no immediate plans for rate hikes, contrasting with earlier market expectations of up to three rate hikes within nine months.

Hungary's central bank minutes confirmed plans to continue monetary easing. July inflation came in at 1.2%, raising the likelihood of an additional rate cut at the September meeting.

Government bond yields across CEE declined by 10-20 basis points week-over-week, with Romania as the only exception. Romania will reopen bonds maturing in 2035 and 2040 this week, while Czechia will reopen bonds maturing in 2035, 2037 and 2038.

Serbia's central bank will also hold its policy meeting this week, with rates expected to remain unchanged.

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