Low inflation means quicker cuts
Last month, Poland's annual inflation rate hit 3.4 percent - its lowest point since joining the EU in May last year, which was the last time when CPI was below the upper ceiling of the central bank's 1.5-3.5 percent range.
Most analysts had predicted inflation for March would come in at 3.5 percent, only slightly down on February's 3.6 percent.
"The numbers were surprisingly low," said Micha Dybua, an economist at BNP Paribas. "In the following months inflation should fall further thanks to the continued high base effect. So there's no obstacle to the MPC [Monetary Policy Council] cutting rates by at least 25 points this month."
The Council cut its benchmark rate by 50 basis points last month, and some analysts expect up to 100 basis points of further cuts this year in response to an expected sharp drop in inflation in the second half of the year.
Earlier, some members of the council had indicated that the bank might wait until May, when it had more data, before cutting rates further, but investors are now convinced that a cut is on the cards before the end of this month.
"The baseline scenario for the moment is a cut of 25 basis points [to 5.75 percent] at the next meeting," said Marcin Mróz, an economist at SG Bank in Warsaw.
"It appears that the best is yet to come. I expect inflation to fall below two percent in the next two to three months," he said.
Overall, inflation has been gradually decreasing in the CEE region since EU entry. Markets expect more monetary easing across the region this year. (Reuters)
Most analysts had predicted inflation for March would come in at 3.5 percent, only slightly down on February's 3.6 percent.
"The numbers were surprisingly low," said Micha Dybua, an economist at BNP Paribas. "In the following months inflation should fall further thanks to the continued high base effect. So there's no obstacle to the MPC [Monetary Policy Council] cutting rates by at least 25 points this month."
The Council cut its benchmark rate by 50 basis points last month, and some analysts expect up to 100 basis points of further cuts this year in response to an expected sharp drop in inflation in the second half of the year.
Earlier, some members of the council had indicated that the bank might wait until May, when it had more data, before cutting rates further, but investors are now convinced that a cut is on the cards before the end of this month.
"The baseline scenario for the moment is a cut of 25 basis points [to 5.75 percent] at the next meeting," said Marcin Mróz, an economist at SG Bank in Warsaw.
"It appears that the best is yet to come. I expect inflation to fall below two percent in the next two to three months," he said.
Overall, inflation has been gradually decreasing in the CEE region since EU entry. Markets expect more monetary easing across the region this year. (Reuters)
