National Bank of Poland likely to stand pat in January, policy rate may remain unchanged in 2019

The National Bank of Poland is set to meet this week for its interest rate decision. According to an Erste Group Research report, the MPC is likely to keep the target rate flat at 1.5 percent. Recent developments underpin such a scenario. Moreover, expectations for a more visible rise in the inflation rate in 2018 have evaporated: falling oil prices and no rise in electricity prices have been a reason for the downward revision of inflation forecasts.

Moreover, sluggish inflation in the euro area might postpone the ECB’s rate hike decision. At this point, it appears that quick progress in core inflation towards 1.4 percent is a prerequisite for whether the ECB will be able to hike interest rates for the first time in 2019 or not.

“No change in monetary policy in the Eurozone would support the dovish stance of the MPC. All in all, we expect the policy rate to remain flat throughout the year”, added Erste Group Research.