Real estate outlook Austria: Affordability - not as strained as thought?

29 July 2021 10:23 CEST

The Austrian real estate cycle has progressed in time significantly. The price dynamics are in support of this cycle being a “best ager” rather than being “over the hill”. Regardless, the income development could, by far, not keep pace with the price developments. What is often overlooked, however, is that affordability received strong support from the low interest rate environment and, therefore, not declined as much as might be expected when looking at the price development alone. However, since the interest rates have probably reached their lows, further support to the price dynamics coming from this factor is not in the cards, and affordability might turn into a true price drag.

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Hungary Watch: MNB pledged more bold hikes after July tightening

28 July 2021 09:14 CEST

The National Bank of Hungary (MNB) raised the key interest rate by 30 bp on Tuesday, sending a strong message to market participants that they are serious about tightening, in order to avoid unwanted inflationary risks. From now on the base rate is 1.20%, the overnight deposit rate is 0.25% and the overnight lending rate is 2.15%. With a hawkish statement, a further hike by 30bp is set to follow in August, and the size of another hike in September depends on the inflation report.

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Romania Watch: Fiscal consolidation process on the right track

27 July 2021 16:47 CEST

The public budget deficit was on a decreasing path during H1 as public revenues were on a strong upward trend and control over expenses was tight. We foresee the public budget deficit (in cash terms) to reach 6.8% of GDP in 2021, but a lower level should not be fully excluded.

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Russia Watch: The Big Hike

27 July 2021 11:07 CEST

At the recent meeting, the CBR proceeded with a solid 100bp hike to 6.5%. This decision was the boldest since the 2014-15 crisis period. After this frontloaded rate decision, we expect only some minor upwards adjustment later this year, as inflation should begin to moderate.

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Poland Watch: EU dispute strirs "Polexit" fears, weakening PLN

21 July 2021 15:57 CEST

Recent speculations of Polexit are driven by another turn in the years-long dispute with the EU over the reform of the judiciary. The next important deadline set by EU is 16 August. For now, the tensions additionally weigh on the PLN which is already weakened by global factors.

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Wide Angle Shot: Cryptos under pressure - China gets serious, ECB a little

20 July 2021 10:26 CEST

The crypto market is not getting off the ground and has been under pressure for several weeks. Negative newsflow dominates. The fact that China is now actually pulling the plug does not make the situation any better in the short term — but in our view it creates long-term potential. Plans for a digital euro (or retail digital currencies issued by other central banks) should sharpen crypto assets even more clearly as such and shall constrain their "currency status".

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Wide Angle Shot: Monetary policy in motion in Western Europe & CE/SEE

20 July 2021 06:48 CEST

Monetary policy of European central banks, i.e. at the ECB but also in Central and South-Eastern Europe, is currently in a state of flux. Monetary policy strategies and instruments are in a process of re-think, but there is also a return to orthodoxy. Our key takeaways: changes are not necessarily in the same direction. Speaking in central bank slang ECB is expectedly more on the dovish side, while central banks in CE/SEE are more in the hawkish camp as of late.

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