The highlight of this week will be Thursday’s decision by the Monetary Policy Council on interest rates, followed by the conference of the head of the National Bank of Poland, Adam Glapinski, a day later. This is what awaits us in the economy of Poland and the whole world.
The MPC is expected to keep the benchmark rate at 5.75% in January, according to MPC member announcements. (16th in a row).
Decision of the Monetary and Credit Policy Council and the Conference of the President of the National Bank of Poland
The key for markets will be whether NBP President Adam Glapinski follows through on Friday’s December press conference, when he announced that interest rate cuts would only be possible in 2026, due to the expected rise in inflation in the first quarter. the fourth of this year 2025 after not freezing the energy prices for households.
According to the November forecast of the BMB, which, as always, assumes unchanged price levels in its horizon, regardless of the scenario (freezing/unfreezing of energy prices), inflation will enter the upper band of deviations from the target at the end of 2025. /26 and approaches 2.5%. at the end of 2026
After Glapinski’s statement, the relationship between the opposing wings of the Council became very different. Some members of the MPC still believe that the discussion on the rate cut can begin in March (Wnorowski, Kotecki), others point to the 3rd quarter (Dabrowski, Litvinyuk – “after the election”). A basin signal similar to Glapinski’s position was sent by G. Maslovska, who did not rule out a rate cut in the first quarter of 2026.
On the first day of the meeting (Wednesday), the Council will get acquainted with the second reading of inflation for December, which will show a detailed breakdown of individual indicator categories. According to preliminary data, inflation reached 4.8% in December. increased by 0.2 percent from 4.7 percent. under consensus.
The budget bill is awaiting the President’s signature
Friday is the 7-day constitutional deadline for President Andrzej Duda to sign the 2025 budget document. Due to the reduction of expenses during the work of the Parliament, etc. for the office of the president, the Institute of National Memory or the Constitutional Court (TC), the mass media assume that the head of state can send the law to the Constitutional Court. After that, the court will make a decision on this within 2 months from the date of submission of the application.
In such a scenario, the government would likely refrain from issuing the ruling and the budget would be executed as per the law.
CPI and bank results in the US, inflation data in the euro area
In all likelihood, pending Wednesday’s CPI reading from the United States, markets will remain under the influence of Friday’s reading from the US job market, which suggests it will remain warm. Wall Street indexes fell 1.5-2%, erasing all of this year’s gains, the dollar continued its march toward parity with the euro (up 0.55%), and Treasury yields rose 12 basis points at the short end of the curve. (2Y) and in the other 8 bp. (10 years old).
The number of new jobs in the US non-farm sector (payroll) in December rose by the most since March to 256,000, while the market expected only 165,000. The unemployment rate in the US unexpectedly fell by 0.1 percentage points. to 4.1 percent Another study showed that long-term inflation expectations of American consumers increased to 3.3%. – the highest since 2008
After this information, investors changed their expectations about the next rate cut. by Fed only for September-October.
In this context, Wednesday’s CPI data, although the Fed targets another measure of inflation – the consumer spending deflator (PCE), could potentially be a source of additional volatility in the markets. Consensus predicts a December CPI reading of 0.3%. mdm, equal to the previous month and for the base 0.2% mdm compared to 0.3% earlier. On a year-on-year basis, economists predict an increase of this indicator to 2.9%. from 2.7 percent and the base rate remains unchanged at 3.3 percent.
Inflation data will also be released in the coming days from the Eurozone (second reading) and the UK. Great Britain, Hungary, Romania and the Czech Republic.
GDP readings from China and Germany
On Friday morning Polish time, statisticians from China will publish the GDP reading for the 4th quarter. The market expects a growth of 5.0%. y/y, which during the year was 4.9%, 0.1 p. is less than the official goal of the government.
On Wednesday, Germany’s Destatis will release GDP data for 2024. The consensus predicts a second consecutive decline in the dynamics of the German economy – 0.2%. compared to -0.3 percent in 2023. This is only the second consecutive two-year recession in Germany since 1961, following an episode of GDP contraction in 2002-2003.
In Romania, the central bank will decide on interest rates on Wednesday. Inflation is expected to stabilize at 5.1% in December. and loose fiscal policy, the market does not expect a change in the reference rate from 6.50%.
Main photo source: Grand Varshavski/Shutterstock
