By the end of November, the dollar had clearly lost value, with the USD/PLN exchange rate falling from annual highs of 4.20 to 4.07, while the EUR/PLN exchange rate approached 4.28 , in line with forecasts of further weakness. In Poland, inflation fell from 5.0 per cent to 4.6 per cent in November, but is expected to rise again in the first quarter of 2025, culminating at 5.5 per cent in March. The Monetary Policy Council plans to resume interest rate cuts in March at the earliest, with the prospect of cautious policy easing in 2025, comprising 3-4 cuts of 25bp each. It is expected that in 2025, the dollar could fall to PLN 3.85 and the euro below PLN 4.30. The zloty has limited potential to strengthen against the euro, but could continue its gains against the dollar. In the week ahead, attention will be drawn to Wednesday's MPC interest rate decision, Thursday's OPEC+ meeting, which will discuss a possible move away from oil production cuts, and Friday's US labour market data.
Table of contents:
- Poland's interest rate decision
- OPEC+ cartel meeting on oil production policy
- US unemployment rate (November)
Wednesday, 4.12, 14:30 CET, Poland's interest rate decision
At its latest meeting, the Monetary Policy Council (MPC) decided to maintain the NBP's main interest rate at 5.75 per cent. NBP Deputy President Marta Kightley said that the MPC may start discussing interest rate cuts after the publication of the March 2025 inflation projection. Inflation currently stands at around 5 per cent, and could slightly exceed this level in the first quarter of 2025.
The MPC's decisions will depend on the situation in the energy market and the overall health of the economy. The government has announced an energy price freeze for nine months in 2025, which could limit the rise in inflation. If the freeze is maintained, inflation could fall to 3.5 per cent in the second half of 2025, approaching the NBP target (2.5 per cent ± 1 pp).
The March inflation projection could be crucial for further decisions by the MPC. If conditions are favourable, a gradual reduction in interest rates is possible in the second half of next year.
Analysts forecast interest rates to remain at 5.75 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the PLN, while a lower-than-expected reading could act bearishly on the PLN.
Impact: EUR/PLN, USD/PLN, GBP/PLN, CHF/PLN
Thursday, 5.12, OPEC+ cartel meeting on oil production policy
The largest association of oil producing countries will hold a meeting on Thursday. The organisation is considering delaying a planned January 2025 increase in oil production due to difficulties caused by a global slowdown in demand and an increase in oil production outside the group. OPEC+ currently maintains production cuts of 5.86 million barrels per day (about 5.7 per cent of global demand). The price of Brent crude is hovering around $70-80 per barrel, which is influencing the group's decisions. Talks between the main OPEC+ ministers, including representatives of Saudi Arabia, Russia and Iraq, have taken place over the past few days.
Source: Tradingeconomics.com
Higher-than-expected production can act bearishly on the oil price, while lower-than-expected production can act bullishly on the oil price.
Impact: XTI/USD, XBR/USD
Friday, 6.12, 14:30 CET, US unemployment rate (November)
The US unemployment rate stood at 4.1 per cent in October 2024, maintaining the previous month's level and in line with forecasts. Despite the recent rise in unemployment, the labour market situation in the world's largest economy remains stable. According to the measure used in Europe (the so-called U-6 index), unemployment in the USA is 7.7 per cent.
The analysts' consensus is that the US unemployment rate will remain at its current level in the near term.
Source: Tradingeconomics.com
A higher-than-expected reading could be bearish for the USD, while a lower-than-expected reading could act bullishly on the USD.
Impact: EUR/USD, USD/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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