MNI NBP Preview - February 2024: Cruise Control

Executive Summary:

• No changes to rates or tone of the statement are expected this week.
• Inflation keeps cooling but the NBP sees it rebounding later this year.
• An updated inflation projection in March will provide the next turning point.

Full preview including a summary of sell-side views here:

MNI NBP Preview - February 2024.pdf

The National Bank of Poland (NBP) will most likely stand pat on rates again, delivering the outcome expected by virtually all analysts. The central bank sent a clear message that any policy moves are highly unlikely at least until the release of the next macroeconomic projection in March, barring major shocks to the economy. In the absence of these, we believe that the Monetary Policy Council (MPC) will keep interest rates unchanged and stick with the familiar tone of its communique. Governor Glapiński’s press conference scheduled for Thursday will steal the limelight again, with market participants looking for fresh information on the NBP’s assessment of inflation pressures at the start of the year.

We think that a near-unanimous decision to keep rates on hold is the most likely outcome of this week’s meeting, even as hawkish dissenter Joanna Tyrowicz may table a motion for an outsized hike to highlight her well-documented minority view. This outcome is well priced by financial markets and expected by all sell-side analysts whose views we have been able to obtain (see our summary below). Looking further afield, there is an interesting gap between consensus aligning around the view that the NBP will lower rates very cautiously from now and market bets on a relatively aggressive easing cycle. The March meeting will bring more clarity on who was right, but we think that it is the market that may eventually move closer to the consensus view rather than the other way round.