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MS Expecting a 100bps Hike on May 5

POLAND
  • MS expects the NBP to deliver a 100bp hike at the upcoming May 5 and then deliver an additional 150bp of tightening following the May decision, with rates peaking at 7% in 3Q22 (against its previous call for a peak at 5.50% in 2Q22).
  • Further down the road, MS sees limited room for easing and thinks that rate cuts will become possible only at the end of 2023.
  • MS estimates that in general the extra tightening would lower GDP growth by about 30bp but the government's measures would offset some of that.
  • In case the external environment turns disinflationary, the higher rates peak will also likely lead to more aggressive easing.

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