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(U1) Tilted Higher


(U1) Uptrend Weakening


Bullard Kickstarts Reflation Unwind Theme


Fresh 2021 Lows

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  • NBP Glanpinksi maintained a dovish tone during online press conference, confirming that it is still way to early to start policy normalization as the uncertainty over polish economic recovery remains elevated.
  • Polish inflation is currently driven only by supply shocks and 'all forecasts' are now predicting CPI inflation to start falling in 2022; July CPI projections will be key for monetary policy outlook.
  • Poland GDP growth could top 10% YoY according to NBP projections.
  • Glapinski added that NBP will have to end QE when raising interest rates and confirmed that the central bank loose monetary policy has no pro-inflationary impact.
  • Even though the uncertainty over the trajectory of ST rates has increased in recent months, it is very likely that the NBP will keep its benchmark rate steady until the end of the MPC term in Q1 2022 unless CPI projections are significantly reviewed to the upside.
  • The dovish stance could lead to some take profit in PLN following 10 weeks of strong momentum on the Zloty.
  • Therefore, weaker currency could also weigh on equities in the short term; the chart below shows the strong co-movement between USDPLN (inv.) and Polish equities in the past cycle.

Source: Bloomberg/MNI