Headline inflation in Central and Eastern Europe (CEE) will peak in most countries in the next few months, at around 20% y/y, and should fall to single-digits across the region by end-2023. But we think this initial large disinflation process will give way to a more gradual easing of core prices pressures in 2024 and that headline inflation will stay above central banks’ targets until 2025. As a result, while interest rates may be cut next year, we think policymakers will be slower than most expect to bring rates back to neutral.
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