Poland deflation has apparently turned the corner, moderating to -1.1% y/y in April from -1.5% y/y in March and a low of -1.6% y/y in February. April inflation was higher than forecast. On a monthly basis, inflation doubled in April to 0.4% m/m due to increases in food, energy, and core inflation.
"Due to base effects, we expect Poland inflation to increase steadily during 2015, particularly in Q4. At end-2015, we expect inflation to be approximately 0% and then pick up to about 1.5% in 2016, at the lower limit of the 1.5-3.5% target." - said Barclays
With the National Bank of Poland policy rate at 1.5%, this implies persistently high real interest rates. However, the pressure on the NBP to cut rates further has moderated with the recent PLN depreciation relative to the EUR.
"We do not expect any further cuts and think that rate hikes will be delayed until the next MPC board takes over in 2016." added Barclays
