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NBP Likely to Proceed With a 100bps Hike

POLAND
  • The NBP is likely to maintain the pace of its tightening cycle and hike the policy rate by 100bps on May 5th following the ‘positive’ surprise in inflation in April.
  • Inflation ‘return to target’ has been delayed by at least 6 months (to end 2023) according to policymakers, which therefore has levitated the market expectation of the NBP terminal rate.
  • The PLN weakness combined with the global risk off environment in the past month has led to a significant surge in implied volatility in Polish risky assets, with the WIG20 index trading nearly 30% below its October 2021 high.
  • Government spokesman Muller said today that Poland’s ruling party has secured enough votes in parliament to appoint NBP Governor Glapinski for a second 6-year term (current term is ending on June 21).
    • The vote is scheduled for next week (May 11/12)

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