Bank Pocztowy See Risk That Weak Q2 GDP Outturn Will Fan Dovish Appetites In MPC

Following the release of Poland's flash Q2 GDP data, Bank Pocztowywrite that "the larger than expected GDP contraction in Q2 has two consequences. First, it lowers the growth outlook for the current year to near zero. Considering that Q2 did not bring any improvement in economic activity, while downside risks are rising in this half of the year (...) a rebound in the coming months may not come at all or be very limited. Second, weaker than expected condition of the economy may be cited by some MPC members as an argument for quicker interest rate cuts, even if CPI does not fall below +10.0% Y/Y."

• This comes after ING wrote in their morning note that "the decline in inflation will be continued. Disinflation is supported by a quick dissipation of external supply-side shocks, which will allow the MPC to cut rates by 50-75bp in 2023. Slow decline in core inflation in Poland compared with regional peers suggests that the second phase of disinflation will be difficult."