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ING Still See NBP Lowering Rates Next Week, Expect 50-75bp Worth Of Cuts This Year


ING released a full note with their reaction to today's Polish CPI data, noting that they still think that the NBP is set to cut interest rates next week, as signalled in their snap reaction circulated via their X handle.

  • They give the following arguments to support their unchanged call:
    • "We are on the path to single-digit inflation in September; the data will be published after the September MPC meeting."
    • "The CPI path in 2H23 should be either close to or slightly lower than the NBP's July projection. The MPC should consider this as a disinflation scenario materialising."
    • "The pace of GDP growth in 2Q23 was lower than the NBP's projection, and data on economic activity in Poland and Europe suggests pushing back the economic rebound instead to 4Q23, so the state of the economy in the second half of this year will still be weak."
    • "In the short term, monetary easing is supported by strong disinflationary trends in global supply chains, resulting in a large drop in companies' inflation expectations, and these trends are still stronger than the rebound in oil and wheat prices."
  • As a result, they "expect the NBP to cut rates by 50-75 basis points this year, and the easing cycle may well continue into 2024."
  • However, "once the favourable impact of falling external prices ends, it's going to be difficult to bring inflation back to target on a sustained basis."

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