Poland's consumer price index remained unchanged y/y in November, the first time prices did not drop since July 2014, statistics office GUS announced in a flash estimate on November 30.
The reading is in line with the consensus and the recent trend that has seen deflation ease every month since April, save July. With CPI moving in line with expectations of the Monetary Policy Council (MPC), and confirming earlier expectations of an escape from deflation by the end of the year, a cut in interest rates appears unlikely as ever.
Indeed, what talk there is of a change in interest rates from rate setters regards a hike, although that is not expected before the end of 2017 at the earliest. On the other hand, dovish views might receive some push from disappointing macroeconomic data. Poland’s GDP expanded just 2.5% y/y in the third quarter on the back of the weakest investment since 2010.
With retail sales and industrial production readings also disappointing, growth in the fourth quarter is expected at 2% at best, and economic expansion across the full year is now forecast at around 2.5%, a major difference from the government’s outlook of 3%-3.2% - a target that has steadily dropped from 3.8% at the start of the year.