Goldman Sachs revised its forecast of interest rate hikes in Poland

The reference rate may rise to 5.5% against the previously expected 5% due to the worsening economic outlook caused by the war in Ukraine, according to Goldman Sachs analysts. The bank lowered its growth forecast for Poland this year. to 5.5 percent from 5.9 percent and raised the forecast of the average annual inflation to 8.2 percent in 2022.

"Given higher inflation and weaker exchange rates, we are raising our forecast for interest rates from 5% to 5.5% in Poland, Hungary, the Czech Republic, and Romania," the release reads.

According to the bank, the combined effect of higher commodity prices (both energy and food) and the depreciation of exchange rates will increase average inflation by around 0.8 percentage points both in 2022 and 2023 in the countries of Central and Eastern Europe.

"Nevertheless, there will be some country variations, with the FX-driven inflation effect being the lowest in Romania, while the direct increase in energy prices in Hungary should be offset by the retail fuel price cap. We, therefore, raise our inflation forecast for the CEE region. For Poland to 8.2 percent in 2022 and 5.0 percent in 2023, for Hungary to 7.3 percent and 3.6 percent, for the Czech Republic to 10 percent and 2,9 percent, and Romania to 9.2 percent and 3.6 percent, respectively," we read.

(ISBnews)