Poland Macro Weekly: All quiet on the monetary policy front

All quiet on the monetary policy front: The Monetary Policy Council left NBP interest rates unchanged for the third month in a row (the reference rate at 6.75%). The incoming data confirm it is an optimal choice.

Registered unemployment rate stood flat at 5.1% in November (in line with expectations), on tentative estimates. Seasonally adjusted rate has stabilized for the last three months. The labour market usually reacts to economic slowdown with a delay, thus the lack of unemployment growth so far does not mean that it will not occur. However, we maintain our view that in the current cycle, the unemployment rate will increase only to a small extent, and the adjustment to lower activity in the economy will take place mainly via lower real wages. Those who lost their jobs would take up vacant posts (which are still plentiful) for lower wages than before, and wage demands are likely to be limited due to increased unemployment fears.
S.Szynkowski vel Sek, Poland’s European affairs minister told Bloomberg that the government will ‘quickly’ push through legislation to meet the European Commission’s demands on judicial independence, if it gets guarantees from Brussels to secure the release of EUR 34.5bn in post-pandemic aid. Meanwhile, the rift between Hungary and the Commission over measures to address anti-corruption concerns has intensified.

We expect that the CA deficit in October was much lower than in September, but a 12M rolling sum has likely increased to 3.9% of GDP.
Final data will most likely confirm, that CPI inflation declined to 17.4% y/y in November, on energy prices, with core inflation growing to 11.2-11.3% y/y.