Weekly

Spring has arrived , consumer and business sentiment is improving, but there was a chill in the latest ‘hard’ data from the economy - industrial and construction output and wage growth in February were noticeably weaker than forecast, which (combined with earlier news of lower-than-expected inflation) has rekindled market expectations of rate cuts. After the weekend, there will be a few more economic indicators from February, including retail sales and money supply on Monday, registered unemployment on Tuesday. We expect sales growth to moderate slightly after a surprisingly strong rise in January, to a still decent level of around 3% y/y
 

After the weekend, we will see more local data releases: on Monday, core inflation for January-February; on Wednesday, March consumer confidence; on Thursday, wages and employment, industrial and construction production and PPI for February; and on Friday, the corporate business survey.
After today's big surprise from the CPI inflation (which came in at 4.9% y/y in January and February, instead of the expected 5.3% y/y - the difference was mainly due to annual changes in the weighting system in the CPI basket, see more in Economic Comment), we estimate core inflation at 3.8-3.9% y/y in January and 3.6-3.7% y/y in February. Together with decelerating wage growth (we expect 8.6% y/y in February) and declining employment, as well as the continued strength of the zloty and low crude oil prices, these are, in our view, further arguments that the conditions for the MPC to start cutting interest rates are getting closer. (...)