Low inflations in EMEA mirrors the central banks' policy stances

The low inflation environment in the region mirrors the accommodative stance of local central banks. In Poland, the first rate hike could take place in Q3 2016, in our view. 

Nevertheless, there is a risk that the new Monetary Policy Council, which should be appointed in March 2016, will be more dovish and will prefer to keep rates unchanged at the current level of 1.5% for longer. 

The Hungarian central bank already announced that it has ended the cycle of rate cuts and that it will maintain loose monetary conditions for an extended period. Effective from 25 September, it lowered the interest rate corridor surrounding the policy rate (1.35%) by 25bp. 

The overnight rate paid on deposits was lowered to 0.1%, and the rate required on overnight collateralised loans to 2.1%. Although further cuts in the new overnight deposit rate are possible, they are unlikely. 

"For the Czech Republic, the central bank is likely to exit the FX intervention regime in Q3 16, although the inflationary risks are now concentrated on the downside", says Societe Generale.