Poland rate cuts to be priced in?

The National Bank of Poland (NBP) will need new faces over the next year. Nine out of the ten MPC members' (including the governor's) terms expire during the first half of next year. 

The Sejm elects three MPC members, the Senate (where the PiS also has a majority) elects three MPC members, the president (also from the PiS) elects the last three (of which one will remain in office), and the president appoints the NBP governor who needs to be approved by the Sejm. Thus, the PiS has full control and can decide the next MPC.

"The most recent suggestion, although from one PiS member from the days just before the election, to get the NBP to pump PLN 60bn a year into the economy for the next five years to push growth to 5% without risking inflation, although not very likely to be implemented, has started speculation that the next MPC and the next NBP governor may be dovish", says Nordea Bank.

Just the last two months a full rate cut has been priced in for the next year, and more could be priced in during the coming period until we know who the PiS intends to elect. Thus, we still see some upward pressure on EUR/PLN in the near term, while keeping our 3-months forecast unchanged at 4.25.