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Investing.com -- Poland’s central bank, known as the National Bank of Poland (NBP), is more likely to restart its easing cycle in May due to weaker-than-expected industrial production and wage data from March.
The decision, however, will largely depend on the Consumer Price Index (CPI) data that is due to be released on April 30th.
In March, the industrial production declined by 0.7% in seasonally-adjusted month-on-month terms, resulting in a year-on-year growth of +2.5%, which is lower than the +3.6% consensus.
The ongoing US tariffs have negatively impacted the outlook for Poland’s industrial sector, even though the country has less exposure to the trade war compared to other emerging markets.
Private sector wage growth also softened from 7.9% year-on-year in February to 7.7% in March, slightly below the consensus of 7.8%. This indicates that domestically generated price pressures are continuing to ease.
Given these data, members of the Monetary Policy Committee (MPC) who favor lower interest rates will have stronger arguments for a rate cut in May.
However, the decision will also depend on other upcoming data points, such as retail sales figures due tomorrow and CPI data next week.
Despite the likelihood of a rate cut, Capital Economics suggests that rates won’t be lowered significantly this year.
This is due to inflation currently standing at 4.9% year-on-year and wage growth unlikely to ease much further.
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