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Government and NBP Doing Their Best To Avoid Further PLN Depreciation In 2022

POLAND
  • PM Morawiecki mentioned in a news conference yesterday that Poland is set to lower VAT on fuels to 8% (from current 23%) and to cut VAT on food staples, gas and fertilizers to 0% for 6 months starting February 1.
  • The tax cuts will cost budget 15 to 20bn PLN.
  • It seems that both the Polish government and the NBP are doing their best also to avoid further PLN depreciation as a weaker zloty keeps supporting inflation expectations.
  • Even though the NBP has changed its strategy regarding its communication on policy outlook in recent meetings, PLN still carries political risk premium due to the on-going dispute with EU bloc.
  • Yesterday, Poland’s Senate also delayed the confirmation vote for two MPC members for the Feb 2/3 session.

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