The final consumer inflation reading for June was 4.1% year-on-year and 0.1% month-on-month, in line with the preliminary estimate by Statistics Poland (GUS).
In July, a significant decline in inflation is expected, which may fall to the upper bound of the National Bank of Poland’s (NBP) inflation target deviation band (2.5% ± 1 percentage point).
This sharp drop in inflation will largely result from two factors: a strong reduction in gas tariffs and a base effect related to the partial freeze of energy prices in July last year.
The August meeting of the Monetary Policy Council (RPP) will be non-decision-making, meaning that any decisions regarding interest rates could come no earlier than September.
The market anticipates that by the end of this year, the RPP will cut interest rates by a total of approximately 50 basis points. An increasing number of statements from Council members indicate the possibility of starting a monetary policy easing cycle, replacing the previous one-off adjustment actions.
Author: Jan Karczewski, Director of Strategic Clients, Michael / Ström Brokerage House
Source: https://ceo.com.pl/w-lipcu-spodziewany-wyrazny-spadek-inflacji-81755
