Polish central bank is set to meet tomorrow for its interest rate decision. According to an Erste Group Research report, the MPC is expected to keep the target rate stable at 1.5 percent and will sustain its dovish rhetoric.
In spite of a sustained strong rate of economic growth, inflationary pressure continues to be limited. The recent flash inflation rate for November came in at 1.2 percent year-on-year, which is below the lower bound of the inflationary target, affirms the sluggish price pressure.
Given that the recently observed decrease in oil prices should balance the expected increases in energy prices for households next year, the inflation growth in 2019 is unlikely to be as excessive as the central bank.
“We see the CPI at 2.4 percent y/y in mid-2019 and we maintain our call for stability of rates next year as well”, added Erste Group Research.