The Monetary Policy Council (MPC) has once again left interest rates in Poland unchanged. In its statement following the MPC meeting, it once again points to a global economic slowdown as a significant deflationary factor. On the local stage, the MPC expects a “significant” drop in consumer inflation dynamics in the first quarter of 2024. Its predictions are based on a weakened economic climate, a decrease in inflationary pressure abroad, weak demand, and the strengthening of the zloty exchange rate.
Conversely, the MPC’s view on the second half of the year is quite different, and the inflation rate during this period will be largely influenced by the policies of the current government. As the MPC points out, “the reintroduction of a higher VAT rate on food and increase in energy prices may cause inflation to rise significantly in the second half of 2024”. Another pro-inflationary factor identified is the increased dynamics of nominal wages (including wage increases for the public sector).
The fairly expected MPC decision is reacted to without major changes by the stock market, the zloty exchange rate, and the yields on treasury bonds. Only the forthcoming MPC meetings, preceded by important macro data, new macro forecasts and government decisions on “pricing policy” will bring resolutions.
Szymon Gil, Broker Michael / Ström Dom Maklerski
