The NBP will most likely leave interest rates unchanged this week, which turns the focus to the Polish central bank's communications.
The National Bank of Poland are universally expected to keep interest rates unchanged this week, extending their streak of stand-pat decisions, the last rate hike being delivered in September 2022. The dovish wing still holds a commanding majority in the Monetary Policy Council and is set to outvote the three hawkish dissenters (Tyrowicz, Kotecki, Litwiniuk). The focus will be on the press conference with Governor Adam Glapinski, with market participants on the lookout for any fresh hints on the interest-rate outlook.
Fig. 1: The MPC are looking for evidence of a sustainable disinflationary trend
Economic data releases since the January meeting of the MPC have been broadly supportive of the central bank’s current tack, corroborating the assessment that restrictive monetary policy gradually helps curb acute price pressures. Consumer inflation decelerated more than expected to +16.6% in December and while a rebound is widely expected in Q1, the consensus view is that we should see a more sustainable disinflation from March/April. At the same time, December data showed that wage growth slowed more than projected, while retail sales and industrial output printed below expected levels, suggesting that economic activity was losing steam.