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The next MacroCompass will be published in September.

Macroeconomic scenario

Economic growth

With April-May data and forecasts for June in hand, we can now estimate that GDP growth accelerated from 3.4 to 3.8% yoy in Q2, somewhat above our earlier assumptions, but within the broader range of estimates from other sources. The upgrade is too small to affect 2026 and 2027 annual averages.

Inflation

The de-escalation of the Middle East conflict has brought market oil prices down almost to pre-conflict levels, prompting the Polish government to completely phase out the fuel anti-inflation programme (lowering excise tax and VAT rate) starting from July. However, due to the high reference base effect and falling oil market prices, the impact of the July tax changes on yearly inflation will be less pronounced. And even if elevated fuel prices were to become a problem again, the risk of a broad-based cost impulse being passed on to the entire economy is significantly lower today than it was several years ago.
The only remaining caveat is core inflation, which will remain near 3.0% yoy in the coming months and is the main argument against interest rate cuts this year.
Two consecutive months of lower-than-expected inflation readings and a weaker impact of the fuel crisis on domestic prices have pushed our inflation expectations downward. We expect inflation to range between 2.5% and 3.0% yoy in the second half of the year.

Labour market

Little novelty on the domestic labour market. Wage growth remains on a downward trend, once we adjust for one-off factors. Employment continues to decline at a stable pace, while the unemployment rate has returned to its “normal” seasonal fluctuations following the temporary disruption caused by cuts to funding for labour market activation programmes. There are currently no signs that these trends will change in the near term. A labour market that increasingly favours employers should continue to exert downward pressure on wage growth and, for the same reason, a meaningful recovery in employment appears unlikely for now. We expect the unemployment rate to continue following its usual seasonal pattern.

Monetary policy

From some monetary tightening to nonnegligible risk of monetary easing – expectations of future NBP policy have experienced a wild swing over the past several weeks. External environment is not conductive to rate cuts right now, though – central banks either hiked, are hiking or are planning to. We expect NBP rates to remain at present levels until the end of the year. The window for cuts will reopen next year and we now expect the NBP to cut rates by 50 bps in 2027, to 3.25%.

Financial markets

The Iran War will not be resumed

Even a cursory glance at the yields on long-term bonds leaves no doubt as to the trend. We wrote about this at length last month, and although the market had a correction, the direction is clear. Subsequent bond rallies are becoming shorter and smaller, while attacks on key resistance levels are becoming more frequent. At the same time, none of the arguments in favor of high interest rates (including at the long end) have lost their validity. The recent escalation in the Persian Gulf and the resulting rise in oil prices have provided only another pretext for selling off Treasury securities and shifting the expected interest rate path upward. It will likely end with a return to the negotiating table and the resumption of oil supplies, but not with a reversal of trends in the interest rate, currency, and stock markets.

The Great Desynchronization

The biggest problem at the intersection of macro and financial markets that we are currently seeing is the divergence in the trajectories of economic growth, inflation, and interest rates among the three economies most important to us (United States, Eurozone, and Poland). Inflation has become entrenched above target in the U.S., but was moving toward target in the euro area and in Poland. Economic growth is likely to accelerate in the U.S., but will slow in Europe and remain stable in Poland. Interest rates are quite likely to rise in the U.S., have already risen in the eurozone, but will not rise in Poland (and speculation about rate cuts is intensifying). So there is no single narrative that fits each of the major economies, and we must consider the consequences of such desynchronization. These primarily affect exchange rates, and the movements of recent weeks largely reflect this. A hawkish Fed and a hesitant ECB (at least in the markets’ perception) are a recipe for a weaker EUR-USD. Maintaining a slightly more restrictive monetary policy in developed markets alongside a stable stance in Poland (and the fading of expectations regarding further tightening) is, in turn, a recipe for a weaker zloty. In both cases, there is significant room for the trends to continue, though this requires breaking through key technical levels.

Which macro data should I check while on the beach

The summer vacation period doesn’t usually lend itself to major market shifts, but it doesn’t rule them out either. We have two months of data releases ahead of us that will help determine the fate of the desynchronization. First, data from the U.S. labor market (and beyond) should reinforce the impression that this economy deserves a dose of monetary tightening. Second, European inflation data will provide justification for canceling the ECB’s second rate hike—it seems that, in this situation, the ECB should simply let those expectations quietly fade away.  

Selected macro releases due this month

• Industrial production (our forecast June: 10.1% yoy) When analyzing industrial output, one has to note that its acceleration in June is facilitated by low base (roughly 1 pp.) and favorable calendar (from -1 to +1 yoy in working days). It is therefore not surprising that double-digit growth in industrial output is likely in June. If anything, it looks to be tempered by negative payback in mining output (after a few very strong months).
• Retail sales (our forecast June: 5.3% yoy) Trading days, weather, base effects in some categories – all suggest that retail sales accelerated in June. In addition, the phaseout of government tax relief for fuels might have stimulated demand at the end of the month.
• CPI inflation rate (our forecast June: 2.5% yoy) The CPI inflation surprised for the second month in a row with a lower-than-expected reading. According to the flash estimate, inflation slowed to 2.5% yoy in June from 3.1% in May. As in the previous month, the positive surprise was primarily driven by non-core categories. The main factor lowering inflation were fuel prices, which fell by over 7% mom in June. Food prices, which were 0.7% lower than a year ago, continue to provide no inflationary pressure. The only downside to the current inflation outlook is core inflation, which remains elevated at around 3.0% yoy.
• Wages in the enterprise sector (our forecast June: 5.4% yoy) There will be less happening in wages in June than in the previous two months. We expect a return to the underlying downward trend following last month’s temporary uptick. However, the June reading is likely to be modestly boosted by a bonus payment at one of the mining companies, which we estimate will add around 0.3 percentage points to annual wage growth.
• Unemployment rate (our forecast June: 5.8%) We estimate that the unemployment rate declined to 5.8% in June from 5.9% in May. This decrease is broadly consistent with the typical seasonal pattern observed at this time of year. In our view, the impact of reduced funding for labour market activation programmes has now largely faded and is becoming barely noticeable.
• Current account balance (our forecast May: EUR -775 mn) The trade balance has passed its cyclical low and is gradually emerging from the deficit, with exports rebounding. Unfortunately, the Middle East conflict and resulting significant surge in imported fuel prices will push the trade balance back towards a deeper deficit (due to lower terms-of-trade).
• NBP interest rate (our forecast September: 3.75%) The MPC will wait and see. Rates are unlikely to change this year.