Poland Macro Weekly: Higher for longer

TOP MACRO THEME(S):

And yet a pause – The MPC left interest rates unchanged, which came as a bit of surprise. Decision was accompanied by updated inflation and GDP projection, which shows the inflation path slightly higher in the long-term, though the timing of its return to the upper band of deviations from the target has not changed fundamentally. High uncertainty regarding future fiscal and regulatory policy has likely shifted the reaction function of the MPC towards stronger determination in fight against inflation.

WHAT ELSE CAUGHT OUR EYE:

The latest NBP Quick Monitoring Survey indicates that economic conditions in the enterprise sector remained subdued in 3q23, while in a 12m horizon a recovery in demand was expected, dependent upon external environment. Investment climate remained diversified, with a relatively better sentiment recorded among larger companies.
President of Poland, A.Duda, entrusted the mission of forming the new government to the current prime minister, M.Morawiecki.
Results of the quarterly NBP survey on the situation on the credit market indicate that in 4Q23 banks will maintain the criteria for loans for companies and tighten criteria for households. On the demand side, banks expect an increase in demand for loans for large enterprises, housing and consumer loans and a decline in demand for loans for SMEs.
The preliminary estimate by MinLab indicates that the unemployment rate remained at 5.0% in October, in line with our expectations.

THE WEEK AHEAD:

Week will start with current account data, which should reflect further improvement in external balance, backed by trade surplus. It will be followed by 3q23 GDP data and we expect that GDP growth finally turned positive, supported by strong investment and better than previously expected consumption. We see some room for a small upward revision of the final CPI inflation in October, specifically with regard to fuel prices. Core inflation will follow the next day.

NUMBER OF THE WEEK:

4q25 – moment of a return of CPI inflation to an upper band of deviations from the target, according to the latest NBP projection.