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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
POLAND
- The NBP meets next week and the recent market developments put policymakers in a 'difficult' position as PLN weakness is calling for aggressive hike.
- However, Polish policymakers run the risk of accelerating the economic slowdown if they proceed with another ‘large hike’ (i.e. 75bps or more).
- The sharp flattening of the 2Y10Y yield curve is already pricing in a significant deceleration in the economic activity (chart below).
- Based on former Glapinski speeches and recent NBP members’ comments, a 50bps hike seems likely, with risk being skewed to the upside.
- A 50bps hike will levitate the policy rate to 3.25% (April 2013 highs).
- With inflationary pressures likely to remain in place longer than previously expected, policymakers will do ‘whatever it takes’ to strengthen the PLN as weaker zloty keeps supporting inflation expectations.
- As a 50bps hike may not be enough to support PLN, the probability that the NBP surprises the market on March 8 is clearly non-negligible.
- NBP has been intervening in FX market in recent days to stabilize the zloty.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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