NBP to keep policy rate on hold next week

Poland's Q2 real GDP growth was approximately flat at 3.6% y/y (SA). Whereas, inflation remains in negative territory at -0.8% y/y in July, leaving effective real interest rates very high. 

"Declines in global commodity prices have put further downward pressure on inflation, probably pushing out forecasts of when inflation might reach the 1.5-3.5% target. Low core inflation at 0.4% y/y is undoubtedly a concern to the NBP", says Barclays. 

In Poland, market conditions provide mixed support for the NBP's posture. The recent PLN deprecation is helpful, causing monetary conditions to loosen. Therefore, the NBP is likely to keep its 1.5% policy rate on hold, as per the verbal guidance from MPC members that rates will likely be unchanged until mid-2016, states Barclays.