Energy supply concerns mount, NBP’s wishful thinking

Governments across Central Europe ramped up efforts this week to prevent possible shortages of energy during the winter, but there is a growing risk of energy rationing that would push the region's economies into a deep recession. Meanwhile, the Polish central bank's large downward revisions to its growth forecasts in its latest Inflation Report underline just how much the economic outlook has deteriorated. We think the central bank is pinning too much hope on the labour market weakening to flush inflation out of the system and that it will need to keep interest rates high throughout next year.