POLAND: Below-Forecast Inflation Print Cements Expectations Of 50bp Rate Cut

Poland's CPI inflation eased to +4.2% Y/Y in April from +4.9% in March, according to preliminary data reported by the local statistics office. Annual inflation was slightly below the consensus forecast of +4.3%, adding to a streak of dovish data prints this year. On a sequential basis, prices rose by 0.4% M/M, in line with expectations.

• Alior Bank write that the latest inflation outturn may encourage the MPC to cut rates by 50bp at next week's meeting. Pekao call the data a modest disinflationary surprise and note that, alongside weak data from the real economy, this will be a sufficient argument for the MPC to deliver a 50bp cut.
• Pekao point to a likely downtick in core inflation to around +3.5% Y/Y. This would mean that it touched the upper end of the +/-1pp tolerance band around the NBP's target. In a similar vein, mBank note that core inflation momentum remains under control, which should support the scenario of lower interest rates.
• The monthly PAP Consensus Call survey circulated prior to the release showed that 20 out of 21 polled economists expected a rate cut next week. Consensus was looking for a 50bp cut in May and another 25bp cut in July, with the end-2025 rate seen at 4.75% and end-2026 rate seen at 3.50%, both 25bp lower than in March.