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NBP Projection Shakes the Market

INVESTINGNBP Projection Shakes the Market

Yesterday was dictated by the new projections of inflation and GDP growth. Inflation in the Czech Republic has met its target for yet another month. Japan is showing less negative economic results.

Inflation projection strengthens the zloty

Yesterday, the NBP inflation projection was published. The market responded with a significant strengthening of the Polish złoty by over two groszy. The problem is that inflation in the new projection is much lower, so theoretically it should accelerate interest rate cuts. Lower interest rates, in turn, mean a weaker currency. So why did the złoty strengthen? The key to this phenomenon seems to be the second part of the forecast, namely GDP growth which turns out to be much better. The forecast for 2024 grew from 2.9% to 3.5%. For 2025, we have an increase from 3.5% to 4.2%. These are very significant changes. So large that, as can be seen, they won in the market over a potentially slightly faster than expected interest rate cut. On the other hand, Adam Glapiński, the president of NBP, should have known about this change in forecasts when he hypothesized a lack of majority for cuts this year. This, in turn, further reduces the impact of this forecast on potential acceleration of interest rate cuts.

Inflation in Czech Republic

Our southern neighbors have magically managed to turn off inflation problems since the beginning of the year. In December, it was 6.9%, but in January, it was 2.3% and February, 2.0%. It seems that the target has been achieved without a yo-yo effect so far. Of course, after such a rapid decline, it might appear, but the current data is strongly optimistic. The Czech koruna had a strong strengthening moment against the euro exchange rate when investors bought it along with the Polish złoty. However, shortly after, the inflation data caused the exchange rate to return to the starting point.

Better results in Japan

Yesterday, we also received data from the Land of the Rising Sun. It turns out that the GDP there grew by 1.2% in the fourth quarter. Analysts expected a growth of 1%. Therefore, we have better than expected data, but on the other hand, it is worth remembering that this is the weakest quarterly reading in a year. These data have resulted in a continued strengthening of the Japanese yen against the dollar, which is the main reference point for the Japanese currency. However, yesterday’s dollar correction against the euro interrupted the dollar’s weakness not only in relation to the European currency but also the yen.

In today’s macroeconomic data calendar, we need to pay attention to:

13:30 – USA – consumer inflation.

Please note that due to the time change in the USA, these data will be released an hour earlier than usual.

Maciej Przygórzewski – chief analyst at and

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