One-Off Adjustment Or Start Of Cycle?

Below summarises the updated NBP rate expectations of sell-side desks released in the interim between the NBP's unexpected decision to cut interest rates by 75bp and today's press conference with Governor Adam Glapinski.

• Commerzbank: "We expect to hear that the rate cut was front-loaded, but we don't expect clear commitment that the rate cuts will stop soon at a certain interest rate level."
• Goldman Sachs: "With sticky core inflation, elevated inflation expectations and double-digit wage growth, we do not expect today's cut to represent the first of many." They see interest rates unchanged through the year-end.
• ING: "This may either be a one-time adjustmen, followed by a pause, or it is the decisive start of a longer cycle of interest rate cuts." They think this question cannot be settled today.
  
• JP Morgan: "For now, we take this as a one-off adjustment, but will reassess after Glapinski's presser." They expect more rate cuts in 2024 only.
• mBank: "The problem is that the Council is not acting on its earlier guidance, so we are not overly attached to its statement." They see a risk of another cut in October and if it does not materialise, if will be a signal that yesterday's adjustment was a one-off move followed by a pause through the end of 2024.
• Millennium Bank: "Considering the murky reaction function of the MPC, predicting the MPC's future moves comes with great uncertainty." For now, they think there won't be further rate cuts this year and easing will resume in 2024.
• Pekao: "Faster than expected rate cuts abroad could justify further rate cuts by the MPC." At this point, they expect another 25bp cut in October, with the policy rate heading towards 4.00% at end-2024.
  
• Santander: "The use of the phrase about adjusting rates (which has not been used in recent years theoretically suggest a one-and-done action rather than the start of an easing cycle." They expect the MPC to pause at least until mid-2024.
• Société Générale: ""The dovish MPC bias (...) means that another cut in October is likely." They think that another 50bp cut in October is likely, but even a 100bp reduction cannot be ruled out, which may be followed by slower post-election easing.
  
• Unicredit: "The size of the cut suggests that the MPC is trying to lower borrowing costs for the private sector ahead of the parliamentary election scheduled for 15 October." They do not expect any further cuts this year, followed by at least 100bp worth of easing in 2024.