EMEA: Polish elections in focus, Russia remain on hold

Poland's parliamentary elections take place on Sunday (25 October), with polls suggesting a PiS victory without a majority. With the PiS likely to be in government in one way or another, the already dovish monetary policy of the NBP will likely be combined with a loose fiscal stance, a combination that should lead to a weaker PLN. 

"We express our bearish view on PLN versus the HUF to reduce the trade's sensitivity to global factors", notes Barclays.

In Russia, CBR is expected to keep its key rate on hold at 11.0% at next week's MPC meeting. Inflation indicators have been relatively positive since the last meeting in mid-September, although it remains high and further pass-through remains as a risk. If the RUB were to start depreciating again, inflation could reaccelerate, something that the CBR not likely to risk at this stage.

In Israel, the Bank of Israel (BoI) is expected to keep its 0.10% base rate unchanged next week. Inflation remains muted, at -0.5% y/y in September, and the prospects for increases look to be diminishing due to government policies (ie, tax cuts). Meanwhile, economic indicators point to a slowdown related to upsurge in violence in country following the disappointing Q2 growth. However, the BoI is unlikely to pursue unconventional policies at this stage. 

"We maintain our bearish bias for ILS and continue remain long USDILS", added Barclays.

In Turkey, quarterly inflation report will be released on Wednesday, which will likely bring upward revision to the bank's inflation forecasts, towards the medium-term plan (MTP) projection (7.6%). The CBT's expectations survey released last week already revealed market's pessimism on inflation, as the year-end forecast inched up to 8.3%. Any guidance from CBT regarding the simplification of monetary policy will also be in focus. Note that the CBT has recently dropped the "flat yield curve" concept, which can be viewed as a step in line with the "normalization" agenda, although there is still long way to go.