No rate cut expected in Poland, but further easing to come in the next months

National Bank of Poland is going to release its monetary policy tomorrow and market widely expects stable monetary policy by Central government. While analysts continue to believe that further rate cut is helpful to balance the economy but such move is unlikely until the March meeting.

Because of the solid domestic demand, Poland recorded strong GDP growth in 2015 while industrial production was up by 7.8% in Q4 2015. However, persistently-falling consumer prices need to be addressed before consumer expectations regarding inflation begin to decline, which could put domestic demand in to risk. Moreover falling energy prices are also responsible for the significant deflation and core CPI around zero levels. If such situations continue in future then it will put pressure on Central bank for more easing policy. 

According to Barclays, Poland inflation is expected to push above 9% in January (9.4% y/y or 1.7% m/m) moreover inflation to remain high through Q1 2016 and gradually decline toward 8.4% y/y by year-end.