• The National Bank of Poland (NBP) kept its policy rate on hold at 1.5%, as expected by us and the unanimous consensus. Communications from MPC members about future rate movements have been consistent, as all expect an extended period on hold, no further rate cuts in this cycle, and that the next rate move will be a hike, says Barclays.

• Recent and future events are solidifying this extended hold stance. On future events, in January and February 2016, the terms of 8 out of the 10 MPC members will end, and reappointment is prohibited. Then in June 2016, the term of Governor Belka runs out - although reappointment is possible, it appears unlikely. However, all of the existing MPC members are eligible for appointment to governor, so some continuity is possible. In any case, the MPC is ready to wrap up its business without further changes and check out, leaving monetary policy decisions to the next MPC.

• On current events, recall that twice previously the MPC has promised not to cut rates further and then subsequently economic trends changed, causing the MPC to relent both times. Specifically, inflation declined to well below forecasts, and the target and growth indicators disappointed somewhat. This is not happening this time, as macroeconomic trends are moving away from supporting monetary easing. Inflation has started to rise, although at -1.1% y/y it remains very low. GDP growth was slightly higher in Q1 15 than expected at 3.5% y/y, and other growth indicators remain positive, notes Barclays. Most importantly, changes in financial markets do not support monetary loosening. The PLN has depreciated more than 3% versus the EUR over a two-month period. 

• At this point, NBP interest rates are likely to remain unchanged through mid-2016, as the MPC promises. This will provide some stability to markets during rising political uncertainty as Civic Platform attempts to improve its political position ahead of upcoming parliamentary elections.