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2Y10Y Yield Curve Inverts, Increasing Recession Risk

POLAND
  • 2Y10Y yield curve is now inverted amid the sharp upside consolidation in ST rates, increasing recession risk (see chart).
  • Yesterday, NBP member Cezary Kochalski mentioned in an interview (Biznes24) that inflation is expected to peak in Q1 2022 at 7%/8% before starting to edge lower.
  • On Tuesday, NBP member Rafal Sura said that NBP may need to rise its policy rate above 1.5% to combat inflation.
  • The NBP board has clearly sounded more 'hawkish' lately and the central bank is likely to continue its tightening cycle at the next meeting next month; the magnitude of the hike will strongly depend on November CPI print (coming out on Nov 30).
  • Next economic data to watch will be Q3 GDP estimate coming out on November 12, expected to decelerate to 4.8% YoY (from 11.2% the previous quarter).

Source: Bloomberg/MNI

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