Inflation in Poland without surprises
Yesterday we learned the reading of core inflation for Poland. It is a price dynamics indicator excluding food and energy. This gives us a result that better shows certain trends than temporary fluctuations.
This parameter is not perfect, because changes in oil costs – even on the logistics side – still affect other prices. Analysts expected a 3% change and we saw exactly that reading. This is overall good news for our economy. It shows that after calming the oil market, we should still stay within the inflation target.
That target is indeed 2.5%, but it has a tolerance band of 1%. We are therefore in the upper 25% of that range. Markets feared that, like in other countries, the price change indicator would surprise us negatively. Therefore, after the data were published, the zloty gained value. Its strengthening was due to the fact that, expecting higher inflation, investors temporarily played for rate hikes.
USA again supports Russia
The U.S.-Israeli aggression on Iran caused huge problems in the oil market. The cause is the blockade of the Strait of Hormuz. To mitigate the effects of this operation – as Americans call it – sanctions on Russian crude were loosened. As a result, we reached a point where, instead of negotiations with Iran, the situation in the Middle East was destabilized.
And to limit the effects of this solution, the USA decided to pour a huge stream of money into Russia so that its military aggression in Ukraine would not be too burdensome for the budget. In this way, instead of ending one war, which was promised to be done in 30 days, a new one was started.
This also contradicts election promises, just like the issue of caring for the portfolios of Americans, who, despite being the largest oil producer, also suffer. Meanwhile, Brent crude is again stabilizing above $110. This happens despite information that in all of June Russia will be able to export the commodity.
The dollar strengthens again
The American currency has long been treated as a safe haven in tough times. As a result, even though Americans destabilize the world, capital flows into the U.S. in a wide stream.
Additionally, expectations regarding interest rates favor the dollar. Looking at interest rate futures, it is clear that the scenario of hikes in 2027 currently dominates.
For now one, but eventually by the end of the year a second may appear. That is why the American currency is setting the strongest levels since the beginning of April against the euro again today.
Today in the macroeconomic calendar, pay attention to:
14:30 – Canada – consumer inflation
