Currency interventions should be expected in all CEE countries

In the face of Russia's aggression against Ukraine and the resulting uncertainty, central banks of Central and Eastern Europe (CEE), including Poland, will limit the cycle of interest rate increases; we should also expect foreign exchange interventions in all CEE countries, assess analysts from the Polish Economic Institute (PIE).

According to the PIE, the outbreak of the war will revise the approach to monetary policy in the world, and the Fed and the European Central Bank (ECB) will take the "wait-and-see" position and re-enter the path of monetary easing.

"Previous forecasts have assumed interest rate hikes in the US and Europe to counter inflation. Currently, however, this poses less of a threat than the monetary conflict. Developed economies will have to develop military capabilities to make up for the spending gap. Therefore, we expect the Federal Reserve (Fed) or The European Central Bank (ECB) will soon switch to a wait-and-see mode, and in the longer term they should ease their monetary policy again,” the report reads.

A similar approach will also be adopted by banks in the region, including the National Bank of Poland (NBP), PIE emphasized. 

(ISBnews)