EURPLN Unfazed by Rate Decision, Extends Pullback Towards Key Support

EURPLN reacted little to both the rate decision itself as well as the policy statement, though is trading at a daily low at typing. The hold decision was in-line with unanimous sell-side expectations while the statement did not offer any surprises – though noted again that inflation developments are associated with “substantial uncertainty”.

• As expected, upside risks to inflation associated with potential rising energy prices were flagged, although the Council maintained its familiar stance overall. Attention will therefore turn to Governor Glapinski’s press conference tomorrow.
• As we mentioned in our preview, the Governor will likely reiterate that there are no discussions of any imminent rate cuts taking place within the MPC at the moment, while reaffirming his personal belief that current monetary policy parameters could remain unchanged through the remainder of 2024, despite suggestions from other MPC members that a cut could be debated towards the end of the year.
• EURPLN last trades below 4.29, extending the pullback from the mid-April high to close to 2%. For now, short-term weakness is considered corrective, with a break of key support at 4.2527, the Apr 9 low, needed to reinstate a bearish theme.