CEE central banks treading a difficult path

Central banks in Central Europe are attempting to draw their tightening cycles to a close, but they are treading a difficult path given the strength of inflation and mounting downward pressure on currencies. We think there is a risk that interest rates could be raised much further. This was underscored by the surprise surge in Polish inflation in September and we now expect at least a 25bp rate hike to 7.00% next week, with possibly more to come.