Commerzbank’s Tatha Ghose highlights that Poland’s National Bank (NBP) is expected to keep its base rate at 3.75% in October, with guidance from Thursday’s press conference key. Several MPC members now see scope for rate hikes if projections show inflation above 4% next year. Despite accelerating Consumer Price Index (CPI) and stronger underlying momentum, NBP’s easier stance is seen as pressuring the Polish Zloty (PLN) unless rhetoric shifts.
NBP stance weighs on Zloty outlook
"Poland’s National Bank (NBP) will announce its October monetary policy decision later this afternoon: consensus anticipates the base rate will remain unchanged at 3.75%. The press conference on Thursday will hold more interest, as usual, because the question is whether Adam Glapinski will officially signal that rate hikes are on the cards."
"MPC comments already point in this direction. Ludwik Kotecki expects a rate-hike discussion in October, although probably not a move, and sees November’s new macroeconomic projections as a basis for one or two 25bp increases, if the projections feature faster than 4% inflation even next year."
"The inflation data justify this shift. Headline CPI accelerated to 4%y/y in September from 3.4%y/y in August. As usual, the year-on-year number is not sufficient: we calculate the seasonally-adjusted month-on-month increase at 0.62%m/m after smoothing. Underlying CPI momentum has therefore re-accelerated to faster than target."
"The comparison with the Czech Republic is also telling: with less inflation momentum, CNB is expected to hike its rate in November, while NBP appears inclined to wait for projections and sit through the inflation overshoot if it could. NBP’s easier monetary stance will keep up the pressure on the zloty exchange rate unless the tone shifts markedly on Thursday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.