TOP MACRO THEME(S):
- Slow start of disinflation: CPI inflation in March declined to 16.2% y/y from 18.4% y/y in February, above expectations. Although inflation embarked on a downward journey, rising core measure brings to mind that its return to inflation target will be a long and bumpy road.
WHAT ELSE CAUGHT OUR EYE:
- Moody’s agency kept Poland’s credit rating at A2 with a stable outlook. It also judged that risks for the rating are balanced despite an exposure to geopolitical risk, based on strong fundamentals and low indebtedness. Meanwhile, S&P kept GDP growth forecast for 2023 at 0.9% and increased that for 2024 by 0.2pp to 3.4%. It also predicts that the MPC will keep interest rates at the current level throughout 2023, with a cumulative reduction of 150bp in 2024.
- Retail trade sector sees a very slow growth of insufficient demand as a barrier limiting activity. It seems that enterprises have not yet fully experienced negative consequences of rising prices on demand, which enables them to implement further increases. However, falling expectations with regard to prices point to consumers’ tolerance of price increases reaching its limit.
THE WEEK AHEAD:
- The highlight of the week will be the MPC meeting on Wednesday. We expect the MPC to maintain the status quo as inflation has already embarked on the disinflationary path accompanied by solid momentum of core inflation, which prevents NBP from strong declarations on the timing of interest rate cuts. Decision could be enriched by hindsight on the impact of recent banking sector turbulence on the domestic monetary policy scenarios. PMI in manufacturing will be of secondary importance, though it will most likely point to deterioration of conditions in the industrial sector.
NUMBER OF THE WEEK:
- 2249.79 PLN – average monthly disposable income in 2022 (approx. 480 EUR), 9.1% higher than in 2021.