Poland’s industrial output, wages weaken in July, monetary policy likely to stay easy for longer period

The Polish zloty had briefly gained following last week’s solid second quarter economic growth print. However, many unsupportive developments followed rapidly, putting an end to the zloty’s rally. Polish industrial production for July came in below market expectations. It dropped 1.2 percent sequentially.

Also, the HICP data published by the Eurostat last week indicated that core prices continued to be unchanged for three consecutive months. If the past six months were to be annualised, the core inflation rate would be arrived at 0.65 percent, stated Commerzbank.

Lastly, the wage data disappointed to the downside too. Wages on a seasonally adjusted basis dropped in July. Annualising from the past six months would yield just 3.8 percent wage growth rate, not the 5 percent to 6 percent which year-on-year numbers imply, noted Commerzbank in a research report.

“Monetary policy in Poland is likely to stay easy for longer: hence, even leaving aside political developments, which are unsupportive, the zloty would face headwinds over the coming quarters”, added Commerzbank.

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