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MNI NBP Preview - June 2023: Waiting For July Forecasts

Executive Summary:

  • The NBP are widely expected to keep interest rates unchanged.
  • Recent weeks brought positive CPI & GDP data as well as dovish comments from MPC members.
  • Next opportunity for a notable revision to official communications may come with July forecasts.

Full preview including summary of sell-side views here:

MNI NBP Preview - June 2023.pdf

The National Bank of Poland are universally expected to keep interest rates unchanged, but this time around there is potential for a dovish shift in communications. Macroeconomic data have developed roughly in line with the central bank’s projections, with price pressures easing faster than expected. This bolstered the dovish wing of the Monetary Policy Council, encouraging them to flag potential for rate cuts being delivered by the end of this year. Given the NBP’s relatively dovish bias, we expect Governor Adam Glapinski to take note of positive signals on disinflation and reaffirm his hope for monetary loosening as soon as in Q4.

Fig. 1: Poland CPI Y/Y (%) vs. EUR/PLN

Source: MNI - Market News/Bloomberg

The next turning point for the NBP will be July, when the next edition of quarterly macroeconomic forecasts is due to be published. In fact, this week’s meeting may well turn out to be a mere placeholder ahead of the next one. A couple of policymakers signalled that the next set of projections will inform a potential debate on loosening monetary settings, which could commence as soon as this autumn if inflation falls to single-digit territory. However, the coming months may see fiscal matters come to the fore, posing one of the key risks for NBP expectations. The election campaign is only gaining steam and it is likely that both the incumbents and opposition parties will unveil more fiscal commitments in a bid to sway undecided voters ahead of a highly polarised poll.

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