MNI NBP Review - June 2024: Zero Chance Of ’24 Cuts

Executive Summary:

• The MPC left rates unchanged as upside inflation risks remain.
• Governor Glapiński sees zero chance of rate cuts this year.
• The Governor hopes that cuts could be possible in mid-’25.

Full review document including a summary of sell-side views here:

MNI NBP Review - June 2024.pdf

The National Bank of Poland (NBP) left interest rates unchanged and introduced no significant adjustments to the statement, but Governor Adam Glapiński’s doubled down on his hawkish rhetoric. The official said that inflation will accelerate to +5.2% Y/Y at the end of this year, should the adjustments to anti-inflation measures be adopted in the proposed shape. He offered relatively clear forward guidance, noting that the probability of rate cuts this year is zero, if the baseline macroeconomic scenario materialises, while expressing hope that conditions will be ripe for a cut in mid-2025. At the same time, he repeatedly mentioned that the Monetary Policy Council (MPC) is ready to hike interest rates if inflation pressures fail to abate.

We think that the odds of NBP rate cuts by the end of 2024 are very low, while debates on loosening policy could restart in early 2025. While we do not see a high risk of any imminent rate hikes, repeated mentions of readiness to tighten policy amplified Governor Glapiński’s hawkish message. These expectations are subject to revisions in the coming months, most importantly on the back of the next detailed inflation projection, which will be released alongside the next rate decision in July. The new projection should shed more light on the medium-term inflation outlook, as seen by the central bank’s staff.