MNI NBP WATCH: Rate Hold; Projections To Give Cut Timing Clue
MNI (LONDON) - The National Bank of Poland is expected to hold key interest rates on Wednesday, and with fresh macroeconomic projections due, attention will instead focus on Governor Adama Glapinski’s comments for clues as to the timing of a discussion around the first cut in the current cycle.
The reference rate is seen staying at 5.75% - where it has been since October 2023 - following January’s higher-than-expected CPI print of 5.3%. (See MNI EM INTERVIEW: Pay, Prices Argue Against Cuts - NBP's Tyrowicz)
However, while the continued recovery of private consumption and recent improvements in both fixed investment and construction could mean the NBP revises its growth forecast for the year up slightly, wage growth - while still strong - appears to be slowing, increasing the possibility of a cut in the second half of the year as service sector price pressures ease.
Glapiński stated following the last meeting that MPC members are looking forward to easing monetary policy, although a rate cut remains some way off. Any indication members discussed - or discussed discussing - the timing of a first rate cut would therefore represent a meaningful shift in tone, even if a change in policy in hardly imminent.
FISCAL OUTLOOK
The governor also downgraded his previous emphasis on the upside risks to the inflation outlook stemming from energy prices following the last meeting, but it will be interesting to see the extent to which expansive fiscal policy - both at home and in Europe - now assumes prominence in his rhetoric.
With inflation still well above target and high near-term levels of uncertainty this is expected to remain relatively hawkish, although the extension of the projection horizon in 2027 may offer longer-term hope of a sustainable return to acceptable levels.