Poland PMI in February dropped slightly from 54.8 in January to 54.2 points, but still remains close 22-month highs, which point to strong business conditions in the Polish manufacturing. Business conditions have improved markedly in each month since December last year. The latest upturn was driven by further expansions of output, new orders and employment.
Markit also noted that Polish manufacturers again faced substantial price pressures in February, while the rate of input cost inflation accelerated to the most marked in nearly six years. Higher costs were reflected by firms’ selling prices, which rose at the steepest rate since April 2011. This all indicate that price pressures continue to build in the manufacturing sector and this might translate into higher producer price and eventually higher consumer price inflation.
The Polish central bank (NBP) holds its interest-rate-setting meeting next week and it widely expected to stay on hold. The NBP will also release its new inflation projection which are expected to be revised significantly upwards.
Poland's 10-member rate-setting Monetary Policy Council (MPC) has kept the benchmark interest rate at a record low of 1.50 percent since a 50 basis point cut in 2015. Deputy Prime Minister and Finance Minister Mateusz Morawiecki said in February that the Polish economy is set to grow over 3 percent this year.