Goldman See Chance Of NBP Turning More Hawkish After Elections

Goldman Sachs write that Poland's core inflation likely declined to +10.3% Y/Y in August, but did not improve as much on a sequential basis, while core components accounted for most of the upside surprise to their forecast for headline inflation.

• Although inflation remained in double digits in August, they stick with their call for a 25bp rate cut from the NBP next week, given "(i) the stsrength of Governor Glapinski's guidance on rate cuts; (ii) that the surprise was relatively small; and (iii) that headline inflation is set to fall further in the near term."
• However, they warn that inflation dynamics remain challenging and there are risks that underlying inflation will prove sticky. They also think that the central bank's reaction function may change after the upcoming parliamentary elections (October 15), after which time it will turn more hawkish.