Page 28 - CE Outlook Regions 2023

After the government phased out the fuel price cap in early December,
analysts raised their inflation expectations further in 2023 to 16-18% as
the measure could boost headline CPI by 2-2.5pp in December to 26%.

MNB policymakers vowed to keep monetary conditions tight for a
prolonged period and expect inflation to return to its 4% tolerance band
in 2024. The markets are not expecting the MNB to raise the effective
rate from 18% further, the highest level in the CEE region.

The European Commission expects annual average inflation to
accelerate to 15.7% in 2023 from 14.8% and the OECD sees the
headline rate decelerating from 13.5 % to 12.7% in 2022. The
government is expected to amend the 2023 inflation target in the
budget bill from 5.2% to 15%.

The Monetary Council reviewed the central bank's latest quarterly
Inflation Report on December 20 and published the main forecasts. The
report puts average annual inflation at 14.5-14.7% for 2022 and at
15.0-19.5% for 2023, while it kept its 2023 GDP growth of 0.5-1.5%
unchanged.

28 CE Outlook 2023 www.intellinews.com