The Polish government’s proposal this week to increase the national minimum wage by another eye-watering 20% or so in 2024 means that wage and inflation pressures could prove even more sticky than we expect. The risks to our already above-consensus forecast for interest rates to end 2024 at 5.50% (from 6.75% now) seem tilted to the upside. Another key development for Poland this week was the European Court of Justice's verdict relating to FX mortgages that ruled in favour of borrowers. Banks will likely increase their provisions to cover the risk of more adverse settlements and this may weigh further on lending growth.
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