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MNI National Bank of Poland Preview - February 2021

The NBP is likely to keep rates unchanged this week at 0.1%, sticking with its dovish tone and vocalised pressure on PLN appreciation. Although the MPC may point to potential space for 10bp of easing in 1Q21, the base case remains for rates to stay unchanged out to ~2022.

MNI Point of View: NBP to Hold at 0.1%, Dovish Tone & PLN Jawboning to Resume •

  • The NBP is likely to keep rates unchanged this week at 0.1%, sticking with its dovish tone and vocalised pressure on PLN appreciation. Although the MPC may point to potential space for 10bp of easing in 1Q21, the base case remains for rates to stay unchanged out to ~2022.
  • A steady flow of better than expected high-frequency data since the Jan meeting should also support no changes to the NBP's current posturing, with the -2.8% FY20 GDP print (vs -3.5% Nov forecast) highlighting Poland's outperformance in the CEE region. However, this may be tempered slightly by recent uncertainty surrounding the vaccine rollout - raising the likelihood that the NBP will remain on the dovish side to maintain positive momentum using QE, rather than rate cuts.
  • On the intervention front, the NBP will likely reiterate its willingness to continue FX interventions to "strengthen the impact of monetary policy easing". However, we expect there to be more talk than action, provided EUR/PLN continues to self-regulate around the 4.50-4.48 zone. Nevertheless, a decisive move through these levels will most likely elicit an NBP response in the near-term. Over the medium-term, stronger PLN fundamentals are expected to place appreciation pressure on the currency and likely be allowed to run below 4.48 in 2H21, once the vaccination rollout has moved closer to its conclusion and the recovery narrative is more deeply ensconced

For full preview please click on the following link:

NBP 03.02.21.pdf

MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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