Witcher 3 -- Possession quest ending

If you take your time to explore the house before hand (as I did even before getting the quest and it scared the shit out of me with the sounds it made) you could find a room behind the oven.

If you go into this room behind the oven you can see it has an opening on that side too. The old dude (whose Name is Hjort :) ) who walks out with the baby was waiting in that room and knew Cerys plan. Therefore tricking Geralt into thinking he was responsible for killing the baby tricking the Hym.