A couple of local sell-side desks said that the government's unexpected 2023 budget amendments announced in the midst of a long weekend last week suggest that fiscal stimulation could continue during the election campaign, reducing the odds of imminent NBP rate cuts.

• Santander say that the increased subsidy for local governments will likely be used to boost their spending, which raises the risk of this year's budget deficit significantly exceeding 5% of GDP. They describe the government's move as "completely unexpected" and interpret it as a sign that the election campaign is increasingly focusing on fiscal stimulation, which improves growth prospects but should also "significantly decrease the probability of rate cuts in coming quarters."
• Millennium Bank write that the government "unexpectedly" adopted amendments to the 2023 budget bill, with the structure of the amendments suggesting that the initial budget deficit target (4.8% of GDP) will be exceeded. They warn that we should expect fiscal loosening to continue during the election campaign, which will decrease the odds of rate cuts this year.
  
  
• Pekao believe that the bulk of additional fiscal spending effectively represents shifting the deficit from local governments to the central government. As a result, they revise their budget deficit forecast for 2023 by 0.4% of GDP (to 4.1% from 3.7% of GDP) rather than by 0.7% of GDP, as would be implied by mechanically adding PLN24bn of additional deficit.