MNI NBP WATCH: Rates Likely On Hold But Focus On Projections

The National Bank of Poland is expected to hold its reference rate at 5.75% for a fifth consecutive meeting on Wednesday, though any downward revision to growth and inflation projections last updated in November would prompt speculation about cuts later in the year.

Governor Adam Glapinski has said the NBP is unlikely to move rates this year, and is likely to repeat his assertion that the fading of “most” external supply shocks, reduced cost pressures, “relatively low” GDP growth, the slowdown in German and eurozone activity and continued zloty strength will see inflation fall to levels consistent with the medium-term target,

Nonetheless he conceded last month that inflation could be pushed “significantly” higher in the second quarter by better-than-expected growth and consumption, increased energy prices and the possible restoration of higher valued-added tax rates on food.

One member of its Monetary Policy Council urged further hikes in an interview with MNI.

Joanna Tyrowicz said core inflation remains too high for the NBP to reach its 2.5% target by the end of this year despite January’s steep drop in headline inflation, to 3.9%. (See MNI INTERVIEW: Polish CenBank Ignores Core Data-MPC's TyrowiczTyrowicz)

Monetary policymakers should pay less attention to transitory disinflation linked to regulatory and fiscal policy, while being mindful of the longer-term effects of wage growth, she added.