Stablecoin: Central European currencies had a lackluster day on Tuesday, with the Hungarian forint down and all others little changed, as investors awaited the US Federal Reserve’s interest rate decision on Wednesday and what the move may mean for monetary and currency policies in the region.The florin shows a slight declineThe Hungarian forint lost 0.1 percent against the euro and was quoted at 394.50. So far, the currency has held within the gains it posted during the previous four sessions. “The forint briefly strengthened above 394 on Monday, but closed within the 394-395 range, where it continues to trade,” said brokerage Equilor.Federal Reserve decision will affect regional central banks
The Fed’s decision on Wednesday is likely to serve as a model for central banks in central Europe, where policymakers are considering further monetary policy easing as inflation weakens and the economy recovers disappointingly. Markets are increasingly predicting a major 50-basis-point interest rate cut by the Fed, which has already done some to weaken the dollar and boost risk appetite.The Fed’s decision is directly relevant for the Hungarian National Bank because the latter is scheduled to hold its monetary policy meeting next week after the bank halted rate cuts in August.
Czech Republic and Poland are keeping an eye on the Federal Reserve’s signalsCzech central bank board member Jan Kubicek is said to be backing a quarter-point cut this month on weak economic data, a firmer currency, inflation close to target and slower wage growth. The Czech National Bank had previously slowed its pace of easing to 25 basis points in August by cutting the main repo rate to 4.50 percent. The Polish zloty fell 0.1 percent to trade at 4.28 euros plus the euro. “Financial markets are awaiting the outcome of the two-day Fed meeting, whose opinion remains divided on how big the eventual rate cut will be. A 50 basis point move is currently seen as most likely,” Bank Millennium said in a report. The EUR/PLN exchange rate stabilised around 4.28 the previous week. With the Federal Reserve decision looming, there is nothing but keen interest from investors and central banks as to the effects on local monetary policies and currency movements.
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