KBC Market Research Desk
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Core CPI in Poland picks up to 1 %
Forint remains above 309 EUR/HUF
The zloty extended its gains yesterday after the Polish statistical office reported that core inflation had reached 1 % y/y in June. It was the second news concerning price growth (following the headline June figure at 0.3 % y/y) that surprised markets on the upside. So far, reactions from the Polish central bank have been mixed. While right after inflation release on Tuesday, Elzbieta Choina Duch suggested that low inflation may induce central bank to cut rates till the end of the year, another NBP board member Andrzej Kazmierczak said yesterday that the current level of interest rate was optimal for the Polish economy and could remain unchanged for a long time. We believe that future monetary decisions in Poland will be determined not only by inflation (which, despite marginal pickups, stays well below the inflation target) but also by economical growth. In this perspective, today’s release of June industrial output will be even more interesting than it would be otherwise.
In contrast to the Polish currency, the Hungarian forint has lacked reasons to firm and has hovered above 309 EUR/HUF. Due to low inflation, the NBH is expected to cut rates further, while government´s program of FX loans conversions keeps the forint under additional pressure. Recall that Hungary’s president János Ader signed a new foreign currency debt relief law on Friday, according to which the new legislation would not be subject to constitutional review.
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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