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Goldman Sachs on Yesterday’s Inflation Data

POLAND
  • Goldman Sachs estimate that core inflation decreased from +11.1% y/y in June to +10.9% y/y in July but say they will need to wait for the release of the detailed breakdown to gauge the sources of softer core.
  • Ongoing decreases in headline and core inflation are likely to support the new guidance from the NBP which points to the first rate cut in September, they say. The market has taken the dovish guidance from the central bank well, with the Zloty remaining on an appreciation trend versus the Euro, and likely leaving room for the NBP to deliver a cut.
  • That said, GS think the reaction function of the NBP is likely to turn more hawkish after the elections (currently expected to take place in October), irrespective of the outcome.

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