Bank of Japan Eyes Further Rate Hikes Amid Middle East Tensions and Inflation Pressures 
Federal Reserve Probes Big Banks Over Private Credit Exposure Amid Growing Systemic Risk Concerns 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
Bank of Japan Governor Signals Accommodative Stance Amid Negative Real Rates 
Australia Bans Card Payment Surcharges Starting October 2025 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
Bank of Korea Governor Nominee Warns of Action if Korean Won Weakens Further 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
Bank of Korea Nominee Shin Hyun-song Calls for Flexible Monetary Policy Amid Iran War Risks 
RBI Clamps Down on Rupee NDF Activity, Banks Face Steeper Losses 
In Poland, the stronger activity and CPI data unlikely to shift NBP from its wait-and-see stance.
We expect the NBP to maintain interest rates unchanged at 1.5% in its first meeting of the year while reiterating its preference for the stable monetary policy through 2017 and rate hikes starting in 2018.
The strong rebound in headline inflation in December (to 0.8%oya from 0%) broadly validate the NBP’s strategy of sticking to its wait-and-see stance through the soft patch in Q3’2016. Polish consumer prices are expected to increase by 0.8 percent year-on-year in December 2016 after showing no growth in November and beating market consensus of a 0.5 percent gain, the preliminary estimate showed.
While in Czech Republic, inflation likely picked up again in December, increasing focus on EURCZK peg.
Czech inflation likely moved closer to the CNB target in December, rising to an estimated 1.8%oya from 1.5% in November. Non-core prices led the projected acceleration, due to both base effects and month-on-month price increases. Retail surveys suggest petrol prices rose around 1.1% in December, driven by the increase in the Brent oil prices after the OPEC agreement as well as koruna weakness versus the US dollar, mirroring the move in EURUSD.
The only exception has been Norway; the Norwegian rate of inflation has eased from 4.4% in the summer to only 3.5% recently.
In outright trades, we hold:
Long USDPLN and Long 23-Feb-17 EURPLN 1x1 call spread (4.45, 4.60), spot ref: 4.3695.
Short 27-Nov-17 EURCZK forward at spot reference 27.0180.
While at spot reference: 9.0775, one can deploy EURNOK diagonal credit put spreads by writing 1w (1%) in the money put while initiating longs in 1m at the money put, the structure could be constructed at net credit.
