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POLAND: Glapinski's Presser In Rearview Mirror, February CPI On Tap

POLAND
PolandCEEMEAEM BulletBulletEmerging Market News
  • At surface level, the tone of Governor Adam Glapinski's press conference turned more hawkish overall, but he still left the door ajar to rate cuts this year. The official devoted most of his presser to the hawkish balance of risks to the inflation outlook, placed more emphasis on accelerating domestic demand, and stressed that currently there are no grounds to loosen monetary policy. However, he also admitted that the Monetary Policy Council had a conversation on future rate cuts, admitted that the next move in rates will be a cut, and confirmed that if headline inflation undershoots the projection, the MPC could reduce rates this year. None of these remarks was particularly surprising in isolation, and all were made in passing and wrapped in decisively hawkish rhetoric, but theoretically leave the MPC some room to pivot to cuts if circumstances change.
  • This was of significance given that the Energy Regulatory Office (URE) will announce updated tariffs later this spring. Based on wholesale market trends, household electricity tariffs are expected to decline markedly. Government officials signalled that if this is not the case, they may extend the existing price freezing mechanism. In any case, this would invalidate the NBP's inflation projection predicated on the anticipated bounce in energy prices when the price cap expires at the end of Q3.
  • MPC's Ludwik Kotecki told Bloomberg that there is a chance for a rate cut in July as he questioned the central bank's new projection, but he played down the odds of a 50bp move. He also suggested that some previously hawkish members are changing their views. Meanwhile, Henryk Wnorowski said that the odds of a cut in July have slightly decreased in the light of the new projection, but it cannot be ruled out.
  • Finance Minister Andrzej Domanski said that the Ministry of Finance expects inflation to be close to +4% Y/Y at the end of 2025, as opposed to the +5.1% pencilled in by the NBP. He added that high interest rates hinder economic growth.
  • The NBP has just published the full Inflation Report, ahead of a presentation from its senior analysts, who will discuss the document in more detail from 11:00GMT/12:00CET.
  • Separately, Statistics Poland will release February CPI data at 09:00GMT/10:00CET alongside annual revisions to the composition of the CPI basket and item weightings. It will also publish the recalculated inflation reading for January, accounting for these changes. Historically, final inflation readings for January were usually adjusted lower.
  • On the political front, US Vice President JD Vance said he would be "shocked" if President Donald Trump agreed to Polish President Andrzej Duda's proposal to include Poland in the US nuclear sharing programme.
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  • At surface level, the tone of Governor Adam Glapinski's press conference turned more hawkish overall, but he still left the door ajar to rate cuts this year. The official devoted most of his presser to the hawkish balance of risks to the inflation outlook, placed more emphasis on accelerating domestic demand, and stressed that currently there are no grounds to loosen monetary policy. However, he also admitted that the Monetary Policy Council had a conversation on future rate cuts, admitted that the next move in rates will be a cut, and confirmed that if headline inflation undershoots the projection, the MPC could reduce rates this year. None of these remarks was particularly surprising in isolation, and all were made in passing and wrapped in decisively hawkish rhetoric, but theoretically leave the MPC some room to pivot to cuts if circumstances change.
  • This was of significance given that the Energy Regulatory Office (URE) will announce updated tariffs later this spring. Based on wholesale market trends, household electricity tariffs are expected to decline markedly. Government officials signalled that if this is not the case, they may extend the existing price freezing mechanism. In any case, this would invalidate the NBP's inflation projection predicated on the anticipated bounce in energy prices when the price cap expires at the end of Q3.
  • MPC's Ludwik Kotecki told Bloomberg that there is a chance for a rate cut in July as he questioned the central bank's new projection, but he played down the odds of a 50bp move. He also suggested that some previously hawkish members are changing their views. Meanwhile, Henryk Wnorowski said that the odds of a cut in July have slightly decreased in the light of the new projection, but it cannot be ruled out.
  • Finance Minister Andrzej Domanski said that the Ministry of Finance expects inflation to be close to +4% Y/Y at the end of 2025, as opposed to the +5.1% pencilled in by the NBP. He added that high interest rates hinder economic growth.
  • The NBP has just published the full Inflation Report, ahead of a presentation from its senior analysts, who will discuss the document in more detail from 11:00GMT/12:00CET.
  • Separately, Statistics Poland will release February CPI data at 09:00GMT/10:00CET alongside annual revisions to the composition of the CPI basket and item weightings. It will also publish the recalculated inflation reading for January, accounting for these changes. Historically, final inflation readings for January were usually adjusted lower.
  • On the political front, US Vice President JD Vance said he would be "shocked" if President Donald Trump agreed to Polish President Andrzej Duda's proposal to include Poland in the US nuclear sharing programme.