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NBP Mark Up Inflation View, Keep Rates Unchanged in Marathon Policy Meeting

POLAND
  • In a decision published much later than usual (possibly indicated extended debate among the board), the NBP kept rates unchanged at 6.75% and raised their inflation forecasts across 2022 – 2024: 2022 CPI view upgraded to 14.4-14.5% (Prev. 13.2-15.4%), 2023 upgraded to 11.1-15.3% (Prev. 9.8-15.1%) and 2024 up to 4.1-7.6% (Prev. 2.2-6.0%).
  • In the post-decision statement, the bank suggested that policy action going forward will be dependent on outturns in inflation and Ukraine, and the previous wave of policy tightening should help rein in prices ahead. We will publish our NBP Review document later today.
  • Following a meeting between European Commission representative and ministers yesterday, the EU stated that while meeting with Poland have been a step in the right direction, the milestones agreed must be met in full in order to unlock EU recovery funds worth as much as €35bln. The EU statement suggests that the government are yet to meet the necessary requirements.
  • The government’s negotiating tactics have come under question in Wyborcza today, who write that the PiS negotiators are going over the heads of their junior coalition partners in the Solidarity party, raising the risk that Solidarity could break up the ruling coalition should significant concessions to the EU be made.
  • Outside the likely end of the anti-inflation shield next year, the government continue to take steps to rein in energy prices, with the government setting the power price limit margin at 3% for producers this morning. Nonetheless, upward pressure on food prices persists, with Rzeczpospolita reporting that grocery stores raised prices by 26.1% Y/Y in October, a rate that’s expected to accelerate into year-end.
  • Minutes for the NBP October meeting (not yesterday’s decision) will be released at 2pm local time (1300GMT / 0800ET), with NBP’s Glapinski speaking an hour later.
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  • In a decision published much later than usual (possibly indicated extended debate among the board), the NBP kept rates unchanged at 6.75% and raised their inflation forecasts across 2022 – 2024: 2022 CPI view upgraded to 14.4-14.5% (Prev. 13.2-15.4%), 2023 upgraded to 11.1-15.3% (Prev. 9.8-15.1%) and 2024 up to 4.1-7.6% (Prev. 2.2-6.0%).
  • In the post-decision statement, the bank suggested that policy action going forward will be dependent on outturns in inflation and Ukraine, and the previous wave of policy tightening should help rein in prices ahead. We will publish our NBP Review document later today.
  • Following a meeting between European Commission representative and ministers yesterday, the EU stated that while meeting with Poland have been a step in the right direction, the milestones agreed must be met in full in order to unlock EU recovery funds worth as much as €35bln. The EU statement suggests that the government are yet to meet the necessary requirements.
  • The government’s negotiating tactics have come under question in Wyborcza today, who write that the PiS negotiators are going over the heads of their junior coalition partners in the Solidarity party, raising the risk that Solidarity could break up the ruling coalition should significant concessions to the EU be made.
  • Outside the likely end of the anti-inflation shield next year, the government continue to take steps to rein in energy prices, with the government setting the power price limit margin at 3% for producers this morning. Nonetheless, upward pressure on food prices persists, with Rzeczpospolita reporting that grocery stores raised prices by 26.1% Y/Y in October, a rate that’s expected to accelerate into year-end.
  • Minutes for the NBP October meeting (not yesterday’s decision) will be released at 2pm local time (1300GMT / 0800ET), with NBP’s Glapinski speaking an hour later.