Economic Analysis

In today's Eyeopener:

• Today, data from the US labour market
• MPC’s Kotecki and Litwiniuk against interest rate cuts anytime soon
• Small changes in EURPLN, declines in bond yields and market rates stopped

After the Easter break, attention will once again turn to current issues, most notably the situation in the Middle East. Unfortunately, Donald Trump’s Thursday address to the nation failed to strengthen market confidence in a swift de-escalation of the conflict, so elevated sentiment volatility and a possible further rise in fuel prices should still be expected.
In the domestic calendar, the only event in the coming week is the meeting of the Monetary Policy Council. (...)

Rising fuel prices pushed inflation up to 3% y/y  in March. A slight decline is likely in April, but the size of this move will depend on the behaviour of commodity prices in the coming weeks. Given developments in the Middle East, we currently assess that even in a scenario of a relatively rapid de-escalation of the conflict, the return of commodity prices to lower levels will be gradual. As a result, the inflation path for the coming months is shifting upwards, which will most likely rule out any interest rate cuts this year.

This was supposed to be a very good year for the Polish economy, with GDP growth close to 4%, the peak of the investment cycle, resilient consumption and a strong labour market, inflation stabilising close to the NBP’s target, and slightly declining interest rates. We still see a chance that this scenario will materialise, although its success depends to a large extent on how persistent the disruption in commodity markets triggered by the US-Israeli attack on Iran proves to be. Since the beginning of the decade, the global economy has been fighting one battle after another, grappling with, among other things, the global pandemic, the energy crisis, rising geopolitical instability, a wave of economic protectionism, volatility in financial markets, and now a severe disruption in commodity markets. (...)