What else caught our eye:
- PLN has weakened on higher risk aversion and increased geopolitical risk in the CEE region. The EURPLN exceeded 4.88, level not seen since 2009. The NBP has reaffirmed its assessment that the recent PLN depreciation is not in line with strong fundamentals of the Polish economy and the current course of domestic monetary policy, and pledged to react to excessive market movements. NBP has actually intervened (on Tuesday, Wednesday, and on Friday together with the CNB) and the government announced that it will be converting EUR coming from EU funds into PLN directly on the market. Taking into account the high level of FX reserves combined with regular EUR inflows from the EU, these PLN-supportive measures might be repeated as long as necessary.
- Manufacturing PMI in February rose to 54.7 from 54.5 in January, on accelerating production and new orders. Softer inflation and lower incidence of supply-side delays was reported. The survey ended on February 22, so it has not yet reflected the impact of war.
- GDP growth in 4q21 was confirmed at 7.3% y/y with consumption growing 7.9% y/y and fixed investment by 11.7% y/y. Contribution of inventories was 4.1pp and exports -3.2pp (reflecting precautionary stock build-up).
The week ahead:
- We expect the MPC will stick to its announced policy of a 50bps rate hikes at the meeting on Tuesday. As the impact of the Russian invasion on Ukraine on the Polish economy might be stagflationary, policy choices for monetary authorities get more tricky. Despite PLN weakness, we do not see any massive capital outflows, therefore we do not see a need for larger hikes. The press conference of NBP governor is expected on Wednesday.
Number of the week:
- 2.8% – LFS unemployment rate in Poland in January, the lowest on record and the second lowest in the EU.