Inflation In Poland May Soon Hit 6%

Despite recent dovish statements from National Bank of Poland Governor Adam Glapiński, our baseline scenario still assumes the first-rate hike in Poland in November, when the NBP updates its projections. We believe that the new projection will bring an even higher CPI than the one presented in July, even though it was already high (3.3% on average in 2022 and 3.5% in the second half of 2023, with core inflation averaging 3.5% in 2023). A recent interview with Glapiński seems to confirm this view. The governor stated that it is very likely that despite the decline in inflation, it would exceed 3.5% in 2022. We estimate that average inflation next year might be almost 4.0%.

Such a projection update with inflation above the upper band of the Bank's tolerance limit, high core inflation (we estimate it to be about 3.7% on average in 2022), and a strong economy (GDP growth of about 5%) should help to build a majority in the MPC in favor of a rate hike later this year. In our opinion, high CPI readings for November and December will be the deciding factor here. We expect that at the end of the year, CPI inflation in Poland may approach 6%.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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