The real wage fund growth rate in the corporate sector has declined to its lowest level since Q3 2023, reducing the inflationary pressure from high wage dynamics. This provides a new argument in favor of cutting interest rates.
Core inflation excluding food and energy prices stood at 3.6% year-over-year in March 2025. Core inflation excluding administered prices—those controlled by the state—reached 3.4%, compared to the same period last year. This marks a slight decline from February’s 3.5%. Core inflation excluding the most volatile prices rose slightly from 4.9% in February to 5.0% in March. Meanwhile, core inflation excluding food and energy remained stable at 3.6% year-over-year. Core inflation measured by eliminating the influence of the 15% of prices with the smallest and largest changes also remained stable at 4.6%, identical to the previous month.
Consumer inflation in March was recorded at 4.9% year-over-year. Compared to the previous month, the prices of goods and services increased by 0.2%.
The growth rate of retail sales among companies employing more than nine people remained unchanged in March compared to February at 0.6%, falling below the market consensus of 1.5%.
At the same time, consumer demand remains strong. Notably, there has been a significant increase in the sales of durable goods categories, aligning with the recently observed rise in consumer sentiment indicators.
In real terms, the wage growth rate in firms dropped to 2.7% year-over-year in March from 2.9% in February, while the growth of the real wage fund decreased to 1.8% year-over-year from 2.0% in February. In Q1, the real wage fund growth in the corporate sector fell to 2.3%, the lowest level since Q3 2023.
Economic data are therefore mixed, making it difficult to definitively state that an interest rate cut should occur as early as May. This makes the changing stance of the NBP president even more important, as well as the evolving expectations of investors.
“Recently, NBP President Adam Glapiński has taken a very dovish tone, clearly signaling the market about the direction monetary policy is heading. We should expect rate cuts totaling 100–125 basis points by the end of the year,” said Maksymilian Kuch, an equity market analyst at XTB, in an interview with MarketNews24. “Market consensus has shifted. Investors are now expecting two 50-basis-point cuts and possibly a third cut of 25 basis points if the Monetary Policy Council (RPP) deems it necessary.”
If the first cut happens in May, we should simultaneously learn from the RPP what to expect in the following months—information that is crucial for investors.
How will the cuts affect the market? Some capital may move from the bond market to the stock market in search of higher returns as bond yields fall.
“From the RPP’s communication after its May meeting, we will likely learn how the Council assesses the impact of trade wars and newly imposed tariffs,” the XTB expert added.
Source: Manager Plus
