The persistent strength of wage growth in Central and Eastern Europe (CEE) reflects continued tightness in labour markets and lingering effects from the 2022-23 inflation shock. While the latter should unwind, we think that wage growth will generally remain above levels needed for central banks to meet their inflation targets on a sustained basis over next couple of years. This feeds into our view that interest rates across most of the region won’t be lowered as far as most other analysts currently expect.
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