Poland one step towards fresh rate cuts next year

Poland released mixed inflation data for September last week: on the one hand, the -0.8%y/y headline and 0.2%y/y core inflation readings were softer than expected. Whereas, corporate wage growth accelerated to above-expected 4.1%y/y from 3.4%. 

The country's wage growth has been volatile month to month without establishing a real uptrend; and even if it had done so, the main story of 2015 has been that wage growth is healthy, but this has not had any spill-over on to broader CPI, says Commerzbank. With September, core inflation moved one step closer to zero. 

Poland will release industrial output and retail sales data today: these will be watched closely because there are tentative signals already - from the PMI in particular - that manufacturing growth has decelerated.

"If today's data disappoint as well, this would move the Polish central bank one step closer to re-opening the rate cutting cycle in H1 2016. With this as our base-case now, we have recently revised up our end-2016 EUR-PLN forecast from 4.15 to 4.25", adds Commerzbank.