CEE Central Bank Monitor: August 2020 Report 1

Updated: Aug 18, 2020

By: The Quinnipiac University Economics Research Team, Kyle Del Balso

This report includes an update on the

  • Czech Republic’s latest Inflation Report for July 2020

  • Hungary’s special announcement of a 10 billion Euro safety net

  • Poland’s latest Inflation Report for July 2020

  • Romania’s special announcement of further interest rate cuts and continued purchasing of domestic government debt

  • Slovakia’s special announcement for July on real economic performance, inflation and labor markets.

Photo by Jaromir Kavan on Unsplash

Czech Republic

Czech National Bank (CNB) - https://www.cnb.cz/en/


At its meeting on 13 August 2020, the Bank Board of the Czech National Bank approved this year’s third Inflation Report). Key findings in the report are that inflation was slightly higher in July than in June, however, it remained around the CNB’s 2% target. In addition, the forecast predicts inflation to remain above 3% until the end of this year, as business face increasing costs and price growth even with demand and economic activity decreasing.


Photo by Timi Keszthelyi on Unsplash


Hungarian National Bank (Magyar Nemzeti Bank (MNB))- https://www.mnb.hu/en

Special Announcement

The Magyar Nemzeti Bank (MNB) has built a 10 billion Euro safety net through agreements which other major banks such as the European Central Bank and the Federal Reserve. Despite the pandemic leading to uncertainty in the global economy, the MNB is prepared to provide support to restore economic growth and protect financial stability in the economy. Increasing its foreign currency liquidity offers a safety net for the MNB to act swiftly and effectively to any particular sub-market pressure while maintaining adequate international reserves.

Photo by Poland Kamil Gliwinski


National Bank of Poland (Narodowy Bank Polski (NBP)) - https://www.nbp.pl/homen.aspx?f=/srodeken.htm


The Polish National Bank released its Inflation Report for July. Their inflation announcement on August 17, 2020 states that “In July 2020, the CPI inflation decreased to 3.0% y/y (by 0.3 percentage points from June 2020). The decrease in the CPI was mainly driven by a weaker food price growth (by 1.8 percentage points and standing at 3.9% y/y), mainly as a result of a decline in the prices of unprocessed food. The growth in the prices of services also slightly declined (by 0.1 percentage point, to 7.3% y/y), mainly on the back of lower prices of package tourism services. On the other hand, the growth of non-food prices picked up (including excise goods; by 0.3 percentage points, to 1.7% y/y), primarily due to weaker seasonal declines in the prices of apparel and footwear (a base effect), as well as higher prices of goods related to recreation and arts. The growth in energy prices went up (by 0.8 percentage points to -3.0% y/y), mainly as a result of a rise in fuel prices coupled with a simultaneous decline in the prices of natural gas tariffs as new, lower tariffs on natural gas had been accepted by the Energy Regulatory Office.”

For the full inflation report: https://www.nbp.pl/en/publikacje/raport_inflacja/iraport_july2020.pdf

Photo by Alisa Anton on Unsplash


National Bank of Romania (NBR) - https://www.bnr.ro/National-Bank-of-Romania-1144.aspx

Special Announcement

The National Bank of Romania (NBR) held a meeting on August 5th 2020. The board decided to slash the monetary policy rate to 1.5 percent per annum from its current 1.75 percent per annum effective August 6th 2020. They also agreed to maintain the existing levels of minimum reserve requirement ratios for both the Romanian leu and foreign currency. The NBR will also look to further their repurchasing agreements and continue to purchase leu-denominated government securities. All decisions are based on current data as well as to combat the extremely high uncertainty in the economy.

Minutes: https://www.bnr.ro/Minutes-of-the-monetary-policy-meeting-of-the-NBR-Board-on-5-August-2020--21673.aspx

Photo by Palo Kertys on Unsplash


National Bank of Slovakia (NBS) - https://www.nbs.sk/en/home

Special Announcement

The National Bank of Slovakia (NBS) has not had a major announcement yet in August. Their NBS Monthly Bulletin for July 2020 states “In Slovakia, […], real economy and labour market indicators have picked up and economic activity has rebounded from April’s low. May saw month-on-month increases in industrial production, sales and exports. Production resumed in the transport equipment manufacturing sector, but overall manufacturing activity remained well below its pre-crisis level.

In the labour market, the number of hours worked increased in May as the economy opened back up, and this was reflected in wage developments during the month. May’s employment reflected ongoing redundancies and streamlining caused by sales losses in previous months. The unemployment rate still increased slightly in June; nevertheless, the shifts between employment and unemployment and vice versa suggest that the labour market is flexible. If the number of redundancies does not increase, the labour market situation could stabilise.

The annual HICP inflation rate slowed in June, reflecting mainly the impact of food prices. Demand-pull inflation remains relatively elevated, supported by deferred demand and cost factors in the services sector.

Banks tightened their credit standards for both households and firms in the second quarter of the year. Households were eschewing credit-based consumption, while, however, their demand for mortgage loans remained strong. Lending rates for households are increasing. Firms are deferring investments but continue to need working capital finance.”

For the full report: http://www.nbs.sk/_img/Documents/_MonthlyBulletin/2020/mb0720en.pdf


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