Weekly

After the weekend we get back to the Polish data releases. There is a long list of September’s indicators in the agenda: core inflation, wages and employment, PPI, industrial and construction output, retail sales, money supply, plus new business climate indicators and consumer confidence survey. After another inflationary surprise (final CPI in September revised up to 5.9% y/y), market will be looking for more hints regarding inflationary pressure. (...) On Tuesday the European Parliament will debate the recent ruling of the Polish Constitutional Tribunal with Polish Prime Minister Mateusz Morawiecki and European Commission President Ursula von der Leyen participating in the meeting. It may be important event, signalling where we are heading in Poland-EU relations.
 

This was an unusually interesting and turbulent week, due to the unexpected rate hike by the MPC (reference rate up 40bp to 0.50%), Constitutional Tribunal verdict on inconsistency of EU law with the Polish Constitution, surprisingly poor data on German output and on US employment. (...) The next rate hike could come next month (flash October CPI may come above 6%, new NBP staff projection of inflation will be much higher than the last one and the zloty may be under selling pressure due to the Constitutional Tribunal verdict). On the other hand, the verdict is pushing up the risk of a freeze of payments from the EU recovery fund, possibly also of the cohesion funds, which would greatly worsen the economic outlook and reduce the need for more rate hikes.