Expectations for the start of monetary easing cycles in Poland and Czechia strengthened this week and the debate now is about whether or not central banks will cut interest rates at their next meetings in September. We think this is a little too early, but we expect easing cycles to start in Q4. Meanwhile, data released in Central Europe this week provide encouraging signs that the downturn in retail sales may have bottomed out last quarter. Pressure on households’ real incomes from high inflation is easing quite quickly and we think that this will support a gradual recovery in consumer spending in the second half of the year.
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