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15 Jan 2015
Dovish mood among Polish rate setters strengthens – KBC
FXStreet (Barcelona) - The KBC Bank Research Team shares that as deflationary pressures intensify the dovish mood within the NBP has strengthened, further anticipating the Polish Central Bank to cut interest rates this year.
Key Quotes
“Yesterday, the Polish central bank (NBP) left interest rates unchanged as expected. Although the overall tone of the meeting was, in our view, dovish, the Polish zloty strengthened sharply after the meeting and even hit a one-month high against the euro in early trading today.”
“Regarding the meeting, the official statement says that “[] if the expected period of deflation extends, which would increase the risk of inflation remaining below the target in the medium term, and incoming data confirm a slowdown in economic activity [...] the Council does not rule out further adjustment of monetary policy”.”
“At the subsequent press conference, the NBP head Belka indicated that dovish mood among Polish rate setters might be on the rise. It is true that as early as in November last year, Mr. Belka and three more members voted for a 50 bps rate cut. So far, however, the NBP focused predominantly on economic growth and downplayed inflation development stemming to great extent from falling global commodity prices.”
“The recent comments however suggest that the opinion of Polish rate setters with respect to deflation threat may have evolved. Adding to that, November data on retail sales and industrial production as well as development in external environment also point to downside risks for the pace of economic growth in Poland (and therefore to less demand pressures on inflation).”
“We therefore newly expect the NBP to cut interest rates this year (maybe even by 50 bps by the end of July).”
Key Quotes
“Yesterday, the Polish central bank (NBP) left interest rates unchanged as expected. Although the overall tone of the meeting was, in our view, dovish, the Polish zloty strengthened sharply after the meeting and even hit a one-month high against the euro in early trading today.”
“Regarding the meeting, the official statement says that “[] if the expected period of deflation extends, which would increase the risk of inflation remaining below the target in the medium term, and incoming data confirm a slowdown in economic activity [...] the Council does not rule out further adjustment of monetary policy”.”
“At the subsequent press conference, the NBP head Belka indicated that dovish mood among Polish rate setters might be on the rise. It is true that as early as in November last year, Mr. Belka and three more members voted for a 50 bps rate cut. So far, however, the NBP focused predominantly on economic growth and downplayed inflation development stemming to great extent from falling global commodity prices.”
“The recent comments however suggest that the opinion of Polish rate setters with respect to deflation threat may have evolved. Adding to that, November data on retail sales and industrial production as well as development in external environment also point to downside risks for the pace of economic growth in Poland (and therefore to less demand pressures on inflation).”
“We therefore newly expect the NBP to cut interest rates this year (maybe even by 50 bps by the end of July).”