TOP MACRO THEME(S):
- A soft patch: New NBP projection falls close to our baseline scenario for GDP and CPI. It seems that the inflation path doesn’t have a downside bias anymore, thus the potential future update of inflation outlook will likely not trigger an adjustment in interest rates. The projection supports our baseline for interest rates (the end of the tightening cycle).
WHAT ELSE CAUGHT OUR EYE:
- CPI inflation in October was 17.9% y/y (vs 17.2% y/y in Sep) on final data, while core inflation rose to 11.0% y/y (vs 10.7% y/y in Sep) indicating that upward trend in underlying inflation has not been broken yet.
- GDP growth in 3q22 slowed down to 3.5% y/y (from 5.8% y/y in 2q22) probably mostly on the unwinding inventories cycle. We estimate that both private consumption and investment demand moderated in 3q22 (PKOe: 1.6% y/y and 4.2% y/y, respectively). Detailed data will be revealed on Nov 30.
- C/A deficit in September was smaller-than-expected EUR 1.6bn, improving C/A-to-GDP ratio by 0.1pp to 3.7%, for the first time since early 2021.
THE WEEK AHEAD:
- A bunch of local monthly data for October will show whether relatively strong performance (resilience) of the Polish economy seen in 3q22 is continued at the beginning of 4q22. We expect no major disruption to earlier trends (please see our estimates/forecasts in the calendar on page 6). Particular focus may be on industrial output, which likely held up well thanks to revival in automotive sector (supply chains getting back to normal).
NUMBER OF THE WEEK:
- 7% – yield on 10-year POLGBs dived below 7% on Tuesday, down by 218bps from a local peak on Oct 21.