Risk of interest rate cut by Polish MPC in June despite unfavourable economic data (opinion)
There's some risk of a rate cut by Poland's Monetary Policy Council in June, however, strong April retail sales and corporate wage growth data may delay such a move until July or later, listed lender Millennium's economists assessed.
Economists at Bank Millennium noted that "published data strengthen expectations for further interest rate cuts," aligning with their scenario of a 25-basis point cut in July.
They explained that "MPC members recently mentioned cuts in autumn or July if strong arguments arise," with a sustained return of inflation to the National Bank of Poland’s target range being a key trigger.
They added that "these arguments will support another MPC cut before the summer break," while acknowledging "some risk of a cut as early as June, although April’s strong retail sales and wage growth data, as well as the desire for a better assessment of economic prospects during the July projection, may restrain such a move."
Poland's stats office GUS reported that consumer prices rose 4.1 percent year on year in May against the 4.3 percent growth expected by the market, and fell 0.2 percent month on month, against the economists' forecasts of flat CPI level in monthly terms.
Millennium economists maintain their baseline forecast that the reference rate will fall to 4.50 percent by the end of 2025.
"Following today's inflation data, the interest rate market prices a drop of the reference rate to about 4.25 percent," they noted.
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