(MENAFN- ING) Poland: end of the cycle
NBP rate in December (6.75% - unchanged)
The Polish Monetary Policy Council officially declared a pause in its rate hiking
though in practice, this is the end of the cycle. With CPI inflation moderating from 17.9% year-on-year
in October to 17.4% YoY in November (flash estimate) and GDP growth
pointing to
weak
household
spending
and fixed investment, the Council is unlikely to tighten further anytime soon. Policymakers will wait for the impact of rate hikes delivered so far and hope that further tightening by central banks in core markets, along with a
global economic slowdown, will bring
Polish inflation down. However, the National Bank of Poland's
target of 2.5% (+/- 1 perc. point.) is not in sight over the medium term.
Turkey: risks are still on the upside
In November, we expect annual inflation to change direction and drop to 84.4% (2.9% on monthly basis) from 85.5% a month ago, as base effects start to
kick
in. These will become
more pronounced in December and early next year. Stability in the currency is another factor for some moderation in the pace of increase lately. However, the risks lie to
the upside given the deterioration in pricing behaviour and still prevailing cost-push pressures.
Hungary: year-on-year indices of inflation rise further
October economic activity data is due next week in Hungary. We expect the retail sector to post a slowdown in sales volume, as household
purchasing power is increasingly hit by rising inflation. Business survey indicators, including the PMI, suggest that we might also see a
temporary slowdown in industrial production in October,
after a surprisingly strong September. The next big thing however is the November inflation print. We see food prices
rising further as domestic producer prices are skyrocketing in the food industry (close to 50% YoY). Still, the strengthening of the forint may ease some pressure on
imported inflation,
and as
aggregate demand retreats, inflation in
services could
also slow down. In all, we see the month-on-month headline inflation rate at around 1.8% and core inflation at 1.7%. But these rates are still higher than last year's figures
from the same month, thus the year-on-year indices are going to rise further, with the headline and core rates surpassing
22% and 23%,
respectively. When it comes to the budgetary situation, unlike in the previous two months, we see a monthly deficit. This is fuelled by the extra pension adjustment by law due to high inflation. This payment triggered a significant outflow of cash in November, pushing the monthly budget balance into negative territory despite rising revenues from
high inflation and windfall taxes, in our view.
Key events in EMEA next week
Refinitiv, ING
MENAFN02122022000222011065ID1105261268
Author:
Adam Antoniak , Muhammet Mercan, Peter Virovacz
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