Polish MPC split down the middle

The acceleration in headline inflation seen across Emerging Europe in recent months has been driven predominantly by a rise in food prices. This follows droughts in Russia and widespread flooding elsewhere in the region earlier this summer and comes against a more general pick-up in global food inflation. As we have argued before, the relatively quick pass-through from food prices to headline CPI is not all that surprising given the comparatively large share of staple goods within overall CPI baskets in the region. But with the impact likely to be temporary, and underlying price pressures still subdued, we see little reason for policymakers to respond by hiking interest rates anytime soon.