Output slump
Polish industrial output grew by just 0.9 percent year-on-year, compared to expectations of 3.3 percent, while producer prices fell 0.5 percent versus a forecast 0.1 percent fall. Month-on-month prices fell 0.2 percent, while output was down 4.8 percent.
Theses figures came after inflation hit a one-year low of 2.5 percent in May, down from three percent in April. Wage data also showed an increase in the corporate sector of three percent year-on-year in May, which was more than expected, but was 1.9 percent down on month-on-month. The average wage last month was zł.2,424.
"The figures are so weak ... Markets were already pricing in a rate cut in June and the number will boost expectations on the size of the reduction," said Janusz Jankowiak, chief economist with BRE Bank in Warsaw.
"The risk is now shifting from inflation into the real [economic] sphere and I would not rule out a change of bias by the central bank to 'easing' from the current 'neutral'. It may be discussed even this month," he said.
Central bank monetary policy council member Jan Czekaj said the figures would have a "large impact" on upcoming policy decisions.
"It seems that the economy is not going too well," he said, adding that he saw no evidence of inflation pressure in the economy.
Markets had expected benign price pressure and slowing growth would prompt the central bank to ease its 5.5 percent main rate this month, but most had expected a 25 basis-point cut would be followed by only small fine-tuning moves. (Reuters)
Theses figures came after inflation hit a one-year low of 2.5 percent in May, down from three percent in April. Wage data also showed an increase in the corporate sector of three percent year-on-year in May, which was more than expected, but was 1.9 percent down on month-on-month. The average wage last month was zł.2,424.
"The figures are so weak ... Markets were already pricing in a rate cut in June and the number will boost expectations on the size of the reduction," said Janusz Jankowiak, chief economist with BRE Bank in Warsaw.
"The risk is now shifting from inflation into the real [economic] sphere and I would not rule out a change of bias by the central bank to 'easing' from the current 'neutral'. It may be discussed even this month," he said.
Central bank monetary policy council member Jan Czekaj said the figures would have a "large impact" on upcoming policy decisions.
"It seems that the economy is not going too well," he said, adding that he saw no evidence of inflation pressure in the economy.
Markets had expected benign price pressure and slowing growth would prompt the central bank to ease its 5.5 percent main rate this month, but most had expected a 25 basis-point cut would be followed by only small fine-tuning moves. (Reuters)
