Poland Macro Weekly: Interest rates in the freezer

TOP MACRO THEME(S):

The MPC stands still till March (p.2) - The MPC kept interest rates unchanged, as expected. The relatively hawkish tone of the NBP governor’s press conference confirmed our belief that the MPC will see no reasons for changing interest rates at least until March, while increasing probability of an alternative scenario in which the NBP rates may remain unchanged throughout 2024.

WHAT ELSE CAUGHT OUR EYE:

According to government’s officials, Poland plans to submit 4 additional applications for RRF funds this year with a total value of up to EUR 23bn.
Finance minister, A.Domanski, said that adoption of the 2024 budget is not at risk and the work on the budget bill has been carried out smoothly so far. The budget bill should be sent to President A.Duda by January 29, otherwise he might dissolve the parliament.
According to tentative estimate, the registered unemployment rate inched up to 5.1% in December. The uptick is seasonal, following long stabilisation of the indicator (0% between July and November 2023).
ESI economic conditions indicator for December increased to 99pts from 98.8pts in November. A slight improvement was recorded in services and construction sector, while the latter still holds the lowest values of the index. New government programs which stimulate demand (see number of the week below) have a positive impact on construction, although high uncertainty persists with regard to labour supply, input availability and price level.
Current account balance continued to improve and after Nov. 2023 equalled approx. 1.4% of GDP in terms of a 12m rolling sum. Meanwhile, export growth turned negative again, with foreign sales falling by 2.1% y/y amid stronger fall in imports (-8.0% y/y)

THE WEEK AHEAD:

Next week will bring a full set of local inflation figures for December. We see a chance for an upward revision of CPI inflation (6.1% y/y) after the flash estimate showed a much lower than expected food price growth. This should not impact the core inflation (estimate based on incomplete CPI numbers is 6.8-6.9% y/y). PPI deflation should continue.

NUMBER OF THE WEEK:

421% – record high rise y/y in the value of PLN mortgages applications in Dec.