MNI NBP Preview - November 2023: Post-Election Fog
The MPC convenes for its first meeting after the recent parliamentary elections, which raised uncertainty around the monetary policy outlook.
- Both a 25bp rate cut and a hold are on the table this week.
- Headline inflation registered another sizeable drop but the outlook raises questions.
- There is much uncertainty around the post-election shape of the NBP's reaction function.
Full preview including a summary of sell-side views here:
Following the delivery of relatively forceful monetary easing at the past two meetings (100bp in total), the NBP finds itself at a crossroads, having to decide whether to press ahead with further gradual cuts or pause and wait for a clearer picture of the economy and the post-election outlook. We believe that it would make sense for the Monetary Policy Council to adopt a wait-and-see stance at this junction, even as the latest CPI report revealed another sizeable decline in headline inflation rate. However, one must consider the policymaker’s perspective – which in this case is clouded by fresh uncertainties. We think that ultimately another 25bp rate cut is marginally more likely than an alternative scenario involving an on-hold decision.