National Bank of Poland likely to lower rates by 50bp in Q3

Poland’s central bank’s MPC kept the monetary policy unchanged yesterday. However, the MPC’s statement underlined certain interesting points. On several occasions, the MPC has repeated that the Polish economy continues to be strong, that growth in consumption has upside and that the growth in employment has been reasonable.

However, in its latest statement, the MPC removed an important phrase regarding “expectation of gradual acceleration of base inflation”. This implies that the National Bank of Poland is now less confident regarding recovery of inflation even in the medium-term, according to Commerzbank.

Nonetheless, the central bank’s language indicated a status quo in policy for the time being. NBP Governor Marek Belka said that there are no major threats that will make the central bank lower rates soon.

“We, however, view such remarks within the general principle that NBP cannot really tell us that it will act, until it is ready to act. We still foresee rates being cut by 50bp in Q3”, added Commerzbank.