Poland revises inflation rate for January and February, NBP to eventually cut rates in 2016

Poland’s Stat Office has published new inflation data for the first two months of 2016 as it revised its weights for the CPI basket. Using the new weights, January’s inflation data was downwardly revised to -0.9% from -0.7%. Meanwhile February’s data came to -0.8% y/y, as compared with consensus expectation of -0.7%. In February, prices declined 0.1% m/m. Core inflation data for 2016 are not yet available, but are expected to be running at around zero at the moment.

The CB had recently cut its 2016 inflation forecast to -0.4% from 1.1% based on lower inflation around the euro area and lower energy prices, and not because of weakening of Poland’s domestic demand.

“Our -0.7% inflation forecast for this year, however, is driven by our own sub-consensus 3.1% GDP growth forecast for 2016”, says Commerzbank.

Things are slowing moving in place for the central bank’s new MPC to start considering fresh monetary easing. So far, there are no strong signals. However, the data bolsters the view that the central bank will eventually lower the policy rate to 1% in 2016 from the current 1.5%.