KBC Market Research Desk
KBC Bank
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Polish industrial output may surprise on the downside, …
… which would further raise bets on interest rate cuts
Central European currencies mildly strengthened yesterday as global equity gained and safe haven bond yields slid lower. Weaker-than-expected labour market data in Poland were largely ignored. Despite sluggish employment growth, we believe that the underlying labour market trends in the country remain positive and will increasingly support consumption expenditures.
Today, markets´ attention in the CEE region has been focused on the Polish industrial output. The risks are, in our opinion, skewed to the downside. First negative impacts of Russian sanctions may appear in the figures. Furthermore, private sector has already reported significant decline in car production in August. As Volkswagen, Fiat and GM create about 7 % of the Polish industrial output, we may witness the first decline in y/y production since May 2013.
Such an outcome would further raise bets on interest rate cuts. We believe that the NBP is going to cut rates by 25 bps in October and then again by 25 bps in November. This scenario is currently fully priced in by the market. The risk is that the NBP will decide to loose monetary policy even more.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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