Governor Glapinski Plays Down Potential For Rate Cuts Through End-2024

NBP Governor Glapinski says that he does not expect that a majority could form in the Monetary Policy Council around rate cuts if data will develop as expected through the end of this year. The zloty turns bid in reaction to these comments and EUR/PLN sits 0.4% lower on the day, cementing losses as the Governor reiterates (this time explicitly) that he thinks it is unlikely that rates will be adjusted this year, barring some major changes in the economy.

• Glapinski says that if he was asked to reduce his press conference to one word, it would be "uncertainty." He says that this precludes lowering interest rates, even as inflation is on track to approach the target. He notes that real interest rates are now positive and have a "freezing effect" on the economy, but this "should be the case" and is supported by most MPC members.
• The Governor offers little in the way of further forward guidance, flagging a data-dependent approach and noting that monetary policy decisions will be made on a meeting-by-meeting basis.
• Sell-side analysts have recently been pivoting towards the view that rates may remain higher for longer, even as market pricing was significantly more dovish.