CEE & CCA week ahead: Inflation data from Poland and Czech GDP
The desk anticipates a notable uptick in inflation in Poland, pushing CPI above 4% YoY, which could activate market expectations for interest rate hikes. This expectation aligns with the impending release of CPI figures on Wednesday, where the cessation of the temporary VAT cut on fuels and rising crude oil prices are significant contributors to inflation. Per the full note , this shift in the inflation landscape positions Poland's economy well above the National Bank's target range, signifying potential policy adjustments in the near term. Additionally, Czech GDP data set to confirm the second-quarter figures may shed light on consumer behavior, particularly in relation to household consumption amidst supply chain concerns. Both developments will be closely monitored by traders for their implications on currency valuations.
What the desk is arguing
The desk suggests that heightened inflation in Poland—anticipated to exceed 4% YoY—will likely urge the National Bank of Poland to reconsider its monetary policy stance. This view is substantiated by an increase in fuel prices following the end of the fuel VAT cut in August, which has been compounded by a rise in crude oil prices.
Moreover, the expected stabilization of food prices—following previous declines in vegetable costs—will further support the argument for rate hikes in Poland, especially as consumer price pressures mount. As stated in the source, this rise pushes inflation more notably outside the central bank's target band, elevating market speculation around interest rate adjustments.
Where it sits in our coverage
Our consensus target for the Polish zloty currently sits at 1.075, with a range spanning from a low of 1.04 to a high of 1.12. Specific firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This outlook closely aligns with the cross-firm consensus, with the desk's position at the upper boundary of the established range, reflecting an increased sentiment that the Polish monetary authorities may act sooner regarding interest rates.
How other firms see it
Most firms view the situation as supportive of a potential rate hike trajectory influenced by rising inflation in Poland. However, a few firms, like bofa, contend that inflation pressures may subside, advocating a contrary perspective. Additionally, issues surrounding the Czech industrial PMI may signal concerns over overall economic stability in the region.
Poland's inflation adjustment is likely to have ripple effects on EUR/PLN dynamics, as expectations shift alongside central bank responses to these data releases.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's September CPI forecast indicates inflation will exceed 4% YoY, potentially triggering rate hike speculation.
- 02The end of the VAT cut on fuels and rising crude oil prices are significant inflation contributors.
- 03Czech GDP data may reveal consumer spending trends that could affect regional economic sentiment.
- 04Market focus is particularly on how these inflation figures might influence zloty valuations.
Market implications
Traders should closely monitor the upcoming Polish CPI release on Wednesday, as any deviation from the expected 4% YoY could shift market expectations significantly. This is particularly important ahead of any subsequent monetary policy announcements from the National Bank of Poland that could impact currency values.
Risks to this view
A weakening of inflation expectations or unexpected softening in consumer demand could prompt the National Bank of Poland to delay rate hikes, potentially leading to a bearish shift in the zloty against major currencies. Furthermore, any notable progress in stabilizing supply chains could also dampen inflation pressures, countering current forecasts.
Articles CEE & CCA week ahead: Inflation data from Poland and Czech GDP Published 11:30 Czech Republic Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland and Kazakhstan will release inflation data next week, while the Czech Republic publishes second-quarter GDP details and September industrial PMI figures Adam Antoniak , David Havrlant and Dmitry Dolgin We estimate that headline CPI in Poland rose above 4.0% YoY in September Poland: Inflation set to rise above 4% Wednesday brings the release of the September CPI flash estimate. The end of the temporary VAT cut on fuels (from 23% to 8%) in August, combined with higher crude oil prices in recent weeks, pushed fuel costs to fresh highs in September. Meanwhile, food prices likely remained broadly stable, as the earlier sharp declines in vegetable prices appear to have run their course.
Core inflation was probably little changed, but we estimate that headline CPI rose above 4.0% YoY, thereby moving clearly above the upper bound of the National Bank of Poland's inflation target tolerance range (2.5% +/-1 percentage point). This might support or even boost already high bets on rate hikes in Poland. Czech Republic: GDP details and industrial PMI The statistical office is expected to confirm the headline GDP figures for the second quarter on Wednesday, while the breakdown may be revised, as the contribution of changes in inventories may be absorbed into other expenditure categories.
The main point of interest is whether household consumption remains strong or shows any signs of weakness. The industrial PMI likely softened in September, on the back of the Hormuz conflict re-escalation that brought oil prices to new heights and increased uncertainty about future economic performance on the global scale. CCA: Kazakhstan inflation expected to ease on base effects CPI data for Kazakhstan will be released on Thursday.
We expect monthly inflation to remain above its historical seasonal norm, continuing a pattern seen for much of this year. Rising external food price pressures, lingering pass-through from the VAT increase and continued growth in regulated domestic tariffs should keep monthly CPI elevated. However, the strong tenge and a more moderate fiscal stance should help contain inflationary pressures compared with last year.
As a result, we expect headline inflation to ease from 9.8% YoY in August to 9.5% in September, largely due to favourable base effects. Following the NBK's front-loaded rate cut to 16.25% in September , we do not expect this moderation alone to provide a strong signal for additional easing before year-end, especially given persistent external inflation risks and uncertainty surrounding global commodity prices. Key events in CEE & CCA next week Source: Refinitiv, ING "> Source: Refinitiv, ING CEE & CCA week ahead Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Adam Antoniak Senior Economist, Poland Adam has about 20 years of experience in macroeconomic research. He has worked for leading financial institutions in Poland (Bank Pekao, Bank BPH), and members of international financial groups… David Havrlant Chief Economist, Czech Republic David joined ING in 2024 as Chief Economist for the Czech Republic.
He gained professional experience at the Czech National Bank and international institutions such as the ECB, the EC,… Dmitry Dolgin Chief Economist, CIS Dmitry is a Chief Economist covering Russia and CIS countries. He joined ING in 2018 and has a decade of experience in macroeconomics and FX strategy with Alfa-Bank and Gazprombank. Dmitry… In this article Poland: Inflation set to rise above 4% Czech Republic: GDP details and industrial PMI CCA: Kazakhstan inflation expected to ease on base effects
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