Polish economic prospects remain good, central bank likely to keep rates stable in near future

The Polish economic outlook continues to be good. According to a KBC Market Research note, the Polish economy is expected to expand in a range of 3 percent – 3.5 percent for the whole of 2016. Keeping low interest rates and a relatively weak zloty aside, policy measures of the new government are likely to provide further support to the Polish economy. Therefore, the risks emerge predominantly from a likely decline in the external environment, mostly in Russia, China and other emerging nations, according to KBC Market Research.

Meanwhile, the Polish central bank, National Bank of Poland is expected to maintain official rates stable in the near future as signalled by official statements and comments of Monetary Policy Council members. The next move is expected to be the upside; however, short-term risks are skewed to the downside, added KBC Market Research.

The Polish zloty’s sell-off related to markets’ worries coming from appointment of new members of the Monetary Policy Council is expected to be over now. However, while domestic fundamentals are likely to be supportive of the zloty, sentiment in the emerging markets and the ECB or the Fed policy actions are expected to mainly drive the zloty, added KBC Market Research.