KBC Market Research Desk
KBC Bank
New NBP projection should upgrade growth
Today, the regional highlight should be an interest rate-setting meeting of the National bank of Poland. We believe that the NBP is going to keep its policy unchanged this afternoon, while Governor Glapinsky seems to be once again expressing his satisfaction with the macroeconomic data. In terms of economic growth, it looks very positive, while inflation is staying very close to 2% but still below the target (2.5%). In addition, the Monetary Policy Committee will have a new forecast available, which will probably increase the estimate of GDP growth for this year. It is possible that the NBP forecast will also predict slightly higher inflation in 2018 (compared to the current estimate of 2.0%).
Czech unemployment rate at new all-time low
Although still without a government the Czechs face the best labour market conditions ever. According to just released labour market figures the Czech unemployment rate fell to 3.6% in October, which is all-time lows. It is wort noting that number of vacancies has been approaching the number of unemployed. Should this trend continue we can expect that there will be one unemployed per one vacancy in the Czech economy in 2018.
No wonder that wage-inflation pressures have been finally building, so we expect nominal wage growth at around 7% in 2017 and 2018. In this respect it is interesting to mention the recent CNB's stress-test scenario (see below), which was run with an assumption that pressures from the labour market would last longer. The implication of this scenario is then simple: the monetary conditions need a stronger tightening – in other words higher policy rate and the koruna would be needed.
| LAST | PREVIOUS | CHANGE (%) | |
| EURCZK | 25.55 | 25.55 | -0.01 |
| EURHUF | 311.6 | 311.6 | -0.03 |
| EURPLN | 4.236 | 4.247 | -0.26 |
| LAST | PREVIOUS | CHANGE (bps) | |
| CZGB 10Y | 1.603 | 1.603 | 0.0 |
| HUGB 10Y | 2.33 | 2.33 | 0.2 |
| PLGB 10Y | 3.40 | 3.40 | 0.0 |
| LAST | PREVIOUS | CHANGE (%) | |
| PX | 1055.7 | 1055.7 | 0.00 |
| BUX | 39947 | 39809 | 0.35 |
| WIG | 65134 | 65134 | 0.00 |
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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