Polish Markets Eye Key Central Bank Decision Today

The key risk event for Polish markets today is the imminent monetary policy decision from the National Bank of Poland. The average time for the announcement of the decision this year (i.e. since the switch to two-day meetings) was 14:06 London time, with the last three released at 14:30BST, 13:10BST and 14:10BST.

• mbank write this morning that POLGBs gained yesterday despite upward pressure on yields in core markets, while EUR/USD depreciation spilled over into EUR/PLN, which approached the 4.50 figure. Against this backdrop, mBank stand by their call for a 25bp cut from the MPC today, noting that the panel will look through recent PLN depreciation, which could change further down the road if the zloty continues to weaken.
• Santander reaffirm their call for an on-hold decision and expect the easing cycle to start in October. No matter if the first cut comes today or next month, Santander expect it to be followed by no more than two further reductions by the year-end. They note that the zloty could recoup some of its latest losses if their forecast for today's MPC decision materialises, but it could depreciate slightly in the coming weeks, given that the NBP is poised to cut rates while the EBC could deliver one more hike. They expect that the reaction in local interest-rate markets will be stronger if the NBP stands pat today than if policymakers loosen monetary policy.
  
• ING write that EUR/PLN broke out of its consolidation phase, which likely encouraged short-term investors to jump on that bandwagon, pushing the pair towards 4.50 yesterday. They expect upward pressure to EUR/PLN to dissipate today,arguing that the market has already discounted the expected NBP rate cut. They expect the short end of POLGB curve to firm in reaction to possible dovish messaging from the MPC/Governor Glapinski and cite market talk suggesting that the MPC will need to deliver more aggressive monetary easing to help finance the government's 2024 borrowing needs.
  
• Pekao note that apart from the rate decision itself, the statement and any conditions for the continuation of rate cuts will be in focus today. They note that there is some potential for the MPC to surprise the market, based on its track record. Alior Bank also point to the importance of communique, both in today's statement and in tomorrow's presser with Governor Glapinski.