Polish central bank likely to stand pat in April, may hike in Q1 2019

The Polish National Bank is set to meet this week for its policy decision. According to an Erste Group Research report, the meeting is unlikely to bring any change in the policy rate, although the recent development of inflation raises expectations that the rate would stay stable for longer, even throughout 2019.

In February, Polish inflation came in surprisingly at 1.4 percent year-on-year, while it slowed to 1.3 percent in the month of March, instead of rising. Inflation is likely to reach 1.7 percent in 2018, while the first rate hike is expected to take place in the first quarter of 2019, noted Erste Group Research.

At present, the data indicates to the inflation rate falling below the lower bound of the target of 1.5 percent at the end of this year, and if such a scenario materializes, it would be difficult to justify monetary tightening in a year, particularly as acceleration of wage growth has not translated into demand pressure and core inflation remains low.

“All in all, we see an increasing probability of stability of rates throughout 2019”, added Erste Group Research.

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