Top macro theme(s):
- 6% inflation in October?: CPI inflation increased to 5.8% y/y in September from 5.5% in August acc. to the flash estimate. It is on the way to pass 6% threshold as early as in October, given the current price trends.
- Red-hot housing market in 3q21: Strong upward trend in home prices continues. We expect it might slightly moderate in 2022.
What else caught our eye:
- The European Commission’s monthly sentiment gauge (ESI) for Poland rose to 105.1 in September (from 104.5 in Aug.) - a small gain that masks rising fears in the retail trade, where prices expectations are the highest since 2011 and orders expectations the weakest since the 3rd wave of pandemics – a clear signpost that the jump in prices threatens to strip away recovery’s momentum.
- Manufacturing PMI dived in September to 53.4 pts (from 56.0 in Aug.) suggesting supply shortages and weak new orders inflow due to higher output prices have halted recovery’s momentum in manufacturing.
- Despite a ‘shocking’ motion to hike the reference rate to 2.00% as perthe MPC minutes from September meeting (a motion to raise the key policy rate by 15 bp also failed) we think the majority of the MPC is still in favor of keeping the domestic monetary policy unchanged. However, we notice a slightly hawkish turn (vs. the previous minutes) as the MPC members consider adjusting the monetary policy if the following preconditions are met: (1) the uncertainty about the pandemic and its impact on the economy decreases and (2) forecasts indicate continued favorable economic conditions and the risk of inflation running above inflation target of the NBP in the coming years, In this context, the results of the November projection of inflation and GDP gain on importance.
Number of the week:
2.0% - the level of reference rate postulated in a motion that the MPC rejected in September (compared to 0.1% currently).