MNI NBP WATCH: Another Policy Hold, Dovish Communications Tilt
MNI (LONDON) - The National Bank of Poland is expected to hold key interest rates at 5.75% for a thirteenth consecutive meeting on Wednesday, with a majority of Monetary Policy Committee members viewing still-elevated inflation as both relatively stable and close to its peak and cuts on the horizon in 2025. (See MNI EM INTERVIEW: Too Soon To Declare Inflation Victory - NBP's Tyrowicz)
With November’s annual CPI inflation falling to 4.6%, compared with 5.0% in October, Governor Adam Glapinski is likely to repeat his assertion that easing could be discussed following publication of the NBP's March projections, with a rate reduction - possibly of 50 basis points - following no later than Q2.
The NBP narrowed its near-term inflation projection for the year last month, at the same time as it slightly raised the lower threshold of the outlook for the next two years. (MNI EM NBP WATCH: Rates Held; Inflation, Growth Outlooks Revised)
Annual CPI inflation is seen in the 3.6–3.7% range in 2024, compared with 3.1-4.3% seen in July, the Bank said in a statement. It will then run close to the mid-point of 4.2– 6.6% in 2025 - versus 3.9 – 6.6%, and 1.4 – 4.1% in 2026, compared with the 1.3 – 4.1% seen in the summer, although policymakers noted that the "probability of inflation running below the central path in 2025 is higher than the probability of inflation running above it."
Growth remains a concern, with GDP seen increasing at an annual rate of 2.3–3.1% this year versus 2.3–3.7% projected in July. The forecast for 2025 slipped from 2.8–4.8% to 2.4–4.3%, while the 2026 outlook weakened to 1.7–4.0% from 1.9–4.3% seen a few months ago. (See MNI EM INTERVIEW: NBP Likely To Hold Rates In 2024 - Dabrowski)