Analysts Cast Doubt On NBP Rate-Cut Pricing

The NBP's on-hold rate decision and accompanying statement reaffirmed sell-side expectations of a longer pause in the rate-cutting cycle. Below we summarise the views released in the interim between the announcement of the decision and Governor Adam Glapinski's press conference scheduled for 14:00GMT/15:00CET.

• Citibank call the NBP decision a "non-event" and reaffirm their view that rate cuts will be slower than the FRA market is assuming.
• Commerzbank believe that the earlier than normal announcement of the decision indicates less debate within the MPC. They call the statement "uninteresting" and don't see much potential for major surprises at today's presser. They note that his earlier "ultra-dovish" stance has become less controversial as inflation cools rapidly, while he may prefer to stick with "politically correct, textbook remarks" amid political controversies.
• Goldman Sachs note that the statement provided little new guidance, with a dovish near-term inflation outlook counterbalanced by uncertainty around the new government's policy plans. They expect the NBP to recommence cuts in March.
  
• ING assess the tone of the statement as "balanced and neutral" but a tad more dovish than before. Yet, in their view "it does not indicate that the MPC is ready for 100bp of rate cuts as the market is pricing by the end of 2024". They expect a more "technocratic" tone than before at today's presser. Looking ahead, they expect rate cuts to the tune of 25-50bp through the rest of this year.
  
• JP Morgan say that the statement merely revisits familiar messages but with updated figures. They expect the NBP to stay on hold until 4Q2024, with elevated core CPI and fiscal-driven economic rebound set to keep the bar for renewed monetary easing high. They pencil in two 25bp cuts for 4Q2024.
  
• mBank write that the statement did not provide any surprises, but also did not indicate that we should expect renewed rate cuts anytime soon, despite falling inflation. They note that the MPC slightly sharpened the language on the inflation environment ("the process of disinflation continues"). According to mBank, the MPC paid more attention to current inflationary dynamics while referring to fading supply shocks and low economic activity growth ("it is conducive to a decline in inflation"). They conclude that the NBP is not signalling appetite for an imminent resumption of its rate-cutting cycle and may want to assess the durability of the decline in inflation after the March/April trough. They don't expect any further rate cuts this year, with a risk of one or two 25bp reductions (still less than priced in by the market).
• Millennium Bank reaffirm their call for no change in rates at least until March, with no more than 100bp worth of easing expected through the remainder of 2024. They don't expect the Governor's presser to change these expectations.
  
• Pekao argue that rates are unlikely change at least until March and even this is not a done deal, as the window for rate cuts will be closing in 2H2024. They think that the NBP may keep rates on hold through the whole 2024.
• PKO observe that the MPC described factors driving disinflation in the present tense (while using future tense in the December statement). Otherwise, the general tone of the statement was largely unchanged. They expect the MPC to keep rates on hold in February, but the March projection may support a decision to resume cuts.
  
• Santander write that the MPC will likely wait with any further decisions at least until the release of the next macroeconomic projection in March, which may decrease the probability of further cuts, showing better growth prospects and a longer return to the inflation target. They expect rates to remain on hold until 4Q2024.