CEEMEA Economics Weekly: Easy Does It

Research evidence excerpt

CEEMEA Economics Weekly: Easy Does It

UpdateMease by 25bp in April and in July to bring the key policy rate to 3.25% against 3.50% previously.

• Back in June, the NBP remained on hold, with Governor Glapinski signalling that the fall in inflation in May reduced the risks of a

rate hike. Since then, the flash CPI estimate for June eased to the 2.5%Y target from 3.1%Y, while we estimate core inflation ticked

down to 3%Y from 3.1%Y. Despite easing price pressures, headline inflation continues to run some 50bp above the NBP’s March

projections, while core inflation remains 40bp higher. With that, we expect the NBP to revise up its 2026 CPI forecast by around

30bp to 2.7%Y, but leave it broadly unchanged at 2.3%Y for 2027.

• High-frequency growth indicators for 2Q26 point to GDP stabilising after decelerating in 1Q26, albeit at a slower pace than in

2025. Household disposable income growth remained muted, reflecting both higher inflation and slowing wage growth. Hence, we

expect the NBP to revise down its GDP growth forecast by 10bp to 2.8%Y for this year and by 20bp to 2.7%Y for 2027.

Egypt | CBE to Continue to Hold: We expect CBE to keep rates on hold in its July meetings, despite expected acceleration of June

inflation.

• We expect June headline inflation to accelerate to 15%, up from 14.6% in May.

• Our call is for CBE to keep rates on hold throughout 2026 as inflation accelerates in 3Q26.

• Risks to our call have shifted more towards the downside, with inflation downside surprise in April and May increase risks of

inflation coming in lower than our forecast, given muted second round effects of the March energy hike and FX depreciation.

• If inflation decelerates faster than expected and the EGP maintains its appreciating trend, risks to our rates call would increase,