RPP Decision May Not Surprise the Market
The National Bank of Poland’s decision today will probably not bring changes to the interest rate level.
The Monetary Policy Council’s statement will be published a few days after the surprising reading of consumer inflation in May, which, contrary to expectations did not accelerate, but slowed down.
Annual CPI inflation fell to 3,1% from 3.2% in April, achieving a result below the forecast of 3.7%.
For comparison, before the outbreak of war in the Middle East, prices rose at an annual rate of 2,1%.
Economists at Bloomberg also count the RPP’s hawkish tone. All respondents, a total of 32 people, expect the reference rate to remain unchanged in June at 3,75%.
The key for the market will also be the press conference of the National Bank of Poland’s president, Adam Glapiński, scheduled for Wednesday.
As analysts from ING Think reported, the inflation path in the coming months will remain the central bank’s main challenge.
“In May, inflation exceeded the upper bound of the target range (2.5% +/- 1 percentage point), which Glapiński considered a precondition for a possible rate hike. However, there is no certainty that inflation will stay above this threshold,” we read in the report.
“Macro‑economic forecasts from NBP experts, which will be published in July, may shed more light on this issue and spark a more active debate on monetary policy,” added the report.
Economists expect CPI inflation to decline toward the NBP target and for interest rates to remain unchanged this year.
The UniCredit team also points to other elements affecting upcoming monetary decisions.
“Although unchanged rates remain our primary expectation, the risk of a rate hike has increased, depending on the dynamics of energy prices and rate hikes by the European Central Bank, which could become the main topic of the July forecast update,” they said.
Source: Bloomberg.
See also: The crack in the UK labour market. Companies are preparing for mass layoffs
Dispute at NBP. Donald Tusk Refused to Sign
Adam Glapiński recently found himself at the center of attention due to the Prime Minister’s office’s decision to return a letter requesting a counter‑signature for the nomination of Marty Kightley as vice‑chair of the National Bank of Poland.
Kightley was not the only person whose nomination faced obstacles, as Donald Tusk refused to sign all nominations to the central bank’s board.
According to Rzeczpospolita, the government was to experience a “loss of confidence in Glapiński” after the joint press conference of the NBP president with Karol Nawrocki, who presented an alternative vision to the EU SAFE program.
The so‑called Polish SAFE 0% was supposed to use unrealised gains on NBP gold reserves, the newspaper reminds.
See also: Dollar rate before the break? Experts warn of a “significant drop in the USD rate across all pairs”
Sources: Bloomberg, Rzeczpospolita.
