Continuation of monetary easing gets more support

The negative impact of the recently announced US tariffs on CEE economies certainly outweighs the positive spillover from the German fiscal stimulus, even if the tariffs are halved by year-end, which is our baseline scenario. Lower growth should support the revival of monetary easing and bond markets. At this moment, we see the largest potential for rate cuts in Poland, which has been delaying the normalization of monetary policy for a long time. We still see room for further decline of government bond yields in CEE, although tiny, as we assume tariffs to be halved by year-end.