WOOD Flash – Poland macro: inflection point

We are close to completing the repricing of interest rates for both the policy rate and the local 10-year bond yields. We see the probable peak for the NBP’s reference rate at 7.00%, with a maximum tolerable rate of 8.50% in the event of severe disruptions due to energy shortages; while, for the local bond yields, we suspect that we are at the peak already, at around 8%, consolidating towards 5.5-6% in 2023E. The GDP and consumption performance stayed strong in 2Q, but early signs of strain in housing and the labour market, together with the escalating risk of recession due to energy disruptions, in our view, imply that the NBP is close to the end of the tightening cycle. Doing so should be facilitated by the deployment of the ECB’s anti-fragmentation strategy. We underscore, however, that the scope for easing will be limited by the persistent high inflation.