Page 24 - CE Outlook Regions 2022

According to Capital Economics, CNB rates are expected to reach
3.75% in 2022. The scope for further large interest rate hikes is now
becoming increasingly limited and the tightening cycle is expected to
end in 2Q22 after another 100bp of rate hikes, to 3.75%.

Also, KB analysts expect the CNB to continue in its brisk rate hikes,
in its fight against inflation. Financial markets are currently expecting
CNB hikes to the two-week repo rate to peak at 3.25% in the 6-9
month horizon, KB stressed, however, at the same time added that
subsequently, rates are expected to move down from their peaks
very quickly.

The first rate cut is forecast to happen as soon as early 2023,
followed by a sharp easing of monetary conditions, according to
current expectations. Compared to the market, KB analysts thus see
a similar trajectory for the CNB key rate, including its peak in 2022.

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