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2018/02/12 / Erste Group Research

Weekly Focus Poland

MPC kept policy rate flat at 1.5% as expected and maintained view that stability of rates is most likely scenario this year. This week, we expect to see inflation rate easing further to 1.8% y/y in January and 4Q GDP to arrive above 5% y/y. Labor market data (due Friday) should confirm further tightening. FX and bond market is likely to be driven by global sentiment (following last week’s sell-off on equity market).

February 14: We expect flash 4Q GDP at 5.3% y/y The FY17 GDP at 4.6% suggests that growth dynamics in the last quarter must have been strong. Our point forecast is at 5.3% y/y. The GDP breakdown will be published at the end of February.

February 15: Inflation rate to ease further to 1.8% y/y in January The inflation rate should ease further in January, due to base effects in oil prices. The slowing growth of food prices is likely to limit inflationary pressure as well. In the coming months, we expect the inflation rate to remain below 2% and rise toward the target in mid-2018.

10Y yields in upward trend, spread vs. Bunds holding stable Last week, the development on the bond market was mainly influenced by global sentiment. The sell-off on global equity markets and high risk aversion pushed yields up. The Polish bond market followed the development on the core market and consequently the10Y yield was at 3.6% on Monday, the highest in roughly a year. We expect global sentiment to remain a main driver of the bond market development (especially as there are economic releases in the US scheduled), while local domestic data (easing inflation) supports a stability of rates scenario and may have a stabilizing effect on yields.

EURPLN hit 4.20 last week The FX market was hit by the global turmoil and sell-off on equity markets. The surge in risk aversion and VIX index was reflected mostly on the FX market across CEE countries. The zloty weakened and hit 4.20 vs. the EUR last week. On Monday, the EURPLN stabilized around 4.18, but the increased volatility is negative for the zloty. Domestic data should be of less importance this week, as easing inflation should only confirm the stability of rates scenario. Global sentiment should remain the key determinant on the FX market.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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