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2021/11/18 / Erste Group Research

CEE Special | More rate hikes on horizon

Tightening cycle is in full swing across CEE. With inflation well above target across region and no easing in sight, we expect all regional central banks except for Serbian and Croatian to continue tightening in coming months.

Since the beginning of the tightening cycle in June 2021, the Czech National Bank has raised the key rate by a total of 250bp to 2.75%, the Hungarian central bank by 150bp to 2.1%, the National Bank of Poland by 115bp to 1.25% and the National Bank of Romania by 50bp to 1.75%. The National Bank of Serbia and the Croatian National Bank remain on hold.

With no easing of inflation pressures in sight, regional central banks will continue to raise rates in the coming months. We expect the CNB to continue tightening and the peak of the cycle should be reached at 3.25-3.5% in mid-2022. In 2H22, we expect the CNB to start gradually lowering rates. In Hungary, we expect another 30bp increase to 2.4% at the meeting in December. We see the key rate at 2.85% by the end of 1Q22 and at 3.30% by mid-2022.

In Poland, we see the key rate at 2.5-2.75% by the end of 1Q22 and the peak at 2.5-3.0% should be reached by mid-2022. We expect the National Bank of Romania to continue tightening, likely at a slower pace of 25bp. In our view, the terminal point of the cycle should be reached at 3.00% by mid-2022, with the standing facilities corridor likely back to 100bp. Finally, we expect the National Bank of Serbia to keep the key rate unchanged at 1.0% throughout 2022.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Czech Republic, Hungary, Poland, Romania, Serbia
Currency in focusCzech Koruna, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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