We received a disappointing Valentine’s gift – unless, of course, someone loves high prices. An inflation rate of 5.3% year-on-year is not the level we saw two years ago, but it is alarming. In the background, there are better data from the USA and weaker economic growth in Poland.
Data from Across the Ocean
Yesterday, we received two important readings. On one hand, jobless claims were better than expected. For the third week in a row, they remained below 220,000, coming in at 213,000 this time. Why is the figure of 220,000 so significant? This level is considered low for jobless claims. Analysts indicate that at such levels, we can expect a decrease in the unemployment rate. Thus, these are objectively positive data for the USA and the dollar. The second important reading was producer inflation. Similar to consumer inflation, we saw an increase the day before; however, this increase was larger. How did currencies react? The reaction was strongly atypical. Higher inflation and lower unemployment are factors that should strengthen the dollar. Initially, that was the case, but the market then returned to a broader trend of weakening the American currency this week.
Weaker Economy in Poland
Yesterday, data on GDP growth in Poland for the fourth quarter was released. The market was expecting an increase of 3.4%, but we actually saw a growth of 3.2%. This, however, is half a percentage point above the readings from the third quarter. It is also the best result for our economy since the third quarter of 2022. However, for the market, the difference between the final outcome and expectations is more important. As a result, the Polish zloty lost some value. Consequently, we had our first day without another minimum on the EUR/PLN exchange rate in over a week.
Inflation in Poland
Today, data on price increases in Poland was published. The market expected a rate of 5%, but we observed 5.3%. This is a significant surprise. The 0.3% difference is a serious concern, as evidenced by the market reaction. The Polish zloty got significantly stronger after the announcement. The reason is that higher inflation reduces the likelihood of interest rate cuts. Higher interest rates lead to increased demand for the currency, as it provides better returns for investors. As a result, the zloty has recovered losses from yesterday.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Disclaimer: The information contained in this publication is for informational purposes only. It does not constitute financial advice or any other kind of advice, is of a general nature, and is not directed to any specific recipient. Before using the information for any purposes, one should seek independent advice.
Source: https://managerplus.pl/polska-gospodarka-wzrost-pkb-ponizej-oczekiwan-i-zaskakujaca-inflacja-na-poziomie-53-20303
