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POLAND: JP Morgan Do Not Expect NBP to React to Today’s Inflation Print

POLAND
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  • JP Morgan note that food prices weakened again after last month’s VAT increase, driving the downside surprise to the preliminary reading, while the pass-through of April’s VAT increase was much weaker than generally expected.
  • By mechanically extracting the contributions of non-core items, JPM are left with a residual that suggests core prices were up 0.1% m/m, below their forecast of +0.2%. If confirmed, this implies core CPI falling to 3.8% y/y in May from 4.1%.
  • Although inflation data keep coming on the low side, the NBP remains hawkish, hence, JP Morgan don’t see it reacting to this print specifically. Over time, however, JPM expect that the accumulation of downward moves in CPI with PLN strength and a context of general easing in 2H25 will create space for some small adjustments. They continue to see two 25bps cuts this year, in November and December, with risks skewed towards staying on hold all year.
     
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  • JP Morgan note that food prices weakened again after last month’s VAT increase, driving the downside surprise to the preliminary reading, while the pass-through of April’s VAT increase was much weaker than generally expected.
  • By mechanically extracting the contributions of non-core items, JPM are left with a residual that suggests core prices were up 0.1% m/m, below their forecast of +0.2%. If confirmed, this implies core CPI falling to 3.8% y/y in May from 4.1%.
  • Although inflation data keep coming on the low side, the NBP remains hawkish, hence, JP Morgan don’t see it reacting to this print specifically. Over time, however, JPM expect that the accumulation of downward moves in CPI with PLN strength and a context of general easing in 2H25 will create space for some small adjustments. They continue to see two 25bps cuts this year, in November and December, with risks skewed towards staying on hold all year.