Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- Poland’s central bank kept interest rates unchanged.
- The Governor said inflation is back to target but will rebound in 2H24.
- The Council maintained hawkish tone amid elevated uncertainty.
Full review document including a summary of sell-side views here:
MNI NBP Review - March 2024.pdf
The National Bank of Poland (NBP) left interest rates on hold, while expressing a sense of concern with risks to the inflation outlook, which remain tilted firmly to the upside. Operating in a highly uncertain environment, the Monetary Policy Council (MPC) appeared apprehensive of upside risks to inflation. Although Governor Adam Glapiński declared that inflation is probably back to the +2.5% Y/Y target by now, he stressed that heightened uncertainty prevents the Council from resuming interest-rate action.
Fig. 1: Inflation scenarios for 2024. The red line shows a scenario in which the 5% VAT on food is reinstated and the energy price freeze is lifted. The green line shows a scenario in which both anti-inflationary measures remain in effect. The slide was retrieved from Governor Glapinski's presentation (7th March 2024) delivered during his press conference, with a video recording available on the NBP’s website.
Governor Glapiński was a tad more cautious about forward guidance. Stressing that other MPC members could always outvote him, he suggested that the “situation is clear until the end of June” – which could be interpreted as a hint that the Council will likely stand pat at least until that point and take stock of the situation when in-house analysts prepare the next macroeconomic projection in July. Worth noting that this was a more cautious hint than his earlier comment that rates would likely remain unchanged through the end of this year.
Still, we think it is highly probable that the NBP will keep rates fixed at levels which (in Governor Glapiński’s words) “freeze” the economy even beyond mid-2024 and possibly through the end of this year as upside risks to the inflation outlook about, while their significance in the Council’s reaction function has evidently increased. Following the latest rate decision and presser, sell-side views are converging toward a scenario involving stable interest rates through end-2024.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.