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Contrasting Views on NBP Cut Timing After Today’s CPI

POLAND
  • Goldman Sachs write that today's inflation release implies a considerable easing of core inflation: from +8.0%Y/Y to +5.9%Y/Y, according to their estimates.
  • Despite the stall in headline inflation in November however, they expect the easing to continue ahead and prompt the NBP into recommencing its cutting cycle in 2024Q1.
  • In contrast, JP Morgan say that despite the good news in the data front, they think the NBP’s message will remain unchanged, focusing on the fact that headline CPI declines are losing pace, uncertainty about utility prices and fiscal risks that could come from final budget amendments.
  • They think the bar for cuts is relatively high, especially as they expect core inflation to bottom around 4% next year, due to better growth dynamics, tight labour market, high wage growth, and expansive fiscal policy. They expect the NBP will cut only in late 2024, two times 25bps in 4Q24, after the ECB and the Fed are already on the move lower too.
  • Elsewhere, ING expect a return of the elevated increases in core inflation in the second half of 2024 and in 2025, with registered CPI will still remain above target. They say this argues for keeping rates unchanged in 2024.
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