Poland Macro Weekly: Spring rate cuts are still in play

TOP MACRO THEME(S):

NBP projection supports rate cuts – The Polish MPC left interest rates unchanged as expected, while the NBP’s new inflation projection path, though slightly higher than in July, is subject to an asymmetric downside risk. This supports our scenario of rate cuts in 1h25.

WHAT ELSE CAUGHT OUR EYE:

Poland’s PMI for manufacturing rose to 49.2pts in October from 48.6pts in September, reaching the highest level since April 2022. Although still below the neutral threshold of 50pts, the sector is showing early signs of recovery after 30 months of slowdown, making the longest downturn in the survey’s history. Despite improvements in production, employment and delivery times, new orders and inventories continue to decline. On a positive note, price pressures have continued to ease. Despite positive trends in production and employment, the situation in Polish industry remains challenging. A decline in orders and weak export prospects, especially given Germany’s economic situation, temper optimism about the sector’s future.
Minister of Development Funds and Regional Policy announced that Poland wants to submit two more applications for payment under RRF in the second half of December. Applications will amount to less than PLN 40bn, that Poland recently applied for (2nd and 3rd applications combined). Until November 15th the assessment of the 2nd and 3rd payment applications that have been submitted already is to be completed.

THE WEEK AHEAD:

Key focus of attention will be flash GDP estimate for 3q24 most likely showing a slowdown against 2q24. It will be preceded by September CAB data and followed by detailed CPI data for October CPI.

NUMBER OF THE WEEK:

0.1% – NBP estimate of budget cost, as a percentage of GDP, for addressing the effects of recent flooding; lower than in case of 1997 and 2010 floods (0.2% GDP).