CEE inflation keeps surprising to the downside. Data released on Monday showed Poland and Czech Republic continued low inflation trends into March. Polish CPI down 0.9% yoy confirming the flash estimate, while Czech inflation fell back to 0.3% yoy after having accelerated to 0.6% earlier in the year.

Most countries in the region continue to grapple with falling consumer prices at the onset of 2016. While the absence of inflation is positive for consumers as well as for local currencies, it may increase the real debt burden.

Based on the data, Commerzbank estimates that Polish core CPI fell again by 0.1% yoy in March, showing no tendency for deflation to fade. As for Czech CPI, the headline reading of 0.3% yoy compares with a CNB forecast for the month of 0.9% yoy -- a substantial miss, which highlights the downside risk which still remains to 2016-17 inflation forecasts of the respective central banks.

This inflation behaviour is against continually tightening labour markets in both countries for over a year – hence, may force the respective central banks re-examine their forecasts which assume that continued job growth will soon raise inflation back towards target.

"In our view, the disinflationary trends around CEE are unambiguous and persistent, which strengthens our view that the CE3 central banks will ease monetary policy significantly before year-end. " said Commerzbank in a report.