Sell-Side Analysts Expect Further Rate Cuts, Less Dovish Tone During Today's Presser

Below summarises sell-side notes released in reaction to the 25bp rate cut delivered by the NBP on Wednesday. The focus now turns to Governor Glapinski's press conference this afternoon.

• Alior Bank point to "cosmetic" changes to the statement and note that the rate path is no clearer than before. If the Governor's presser reveals a shift towards less dovish rhetoric, they see risks to their projected rate path - by around 25bp to the upside, i.e. to 5.50% at end-2023 and 4.25% at end-2024.
• BGK write that the most important paragraph of the statement (last but two) was slightly modified but does not suggest that the MPC has entered a cycle of rate cuts. They expect another 25bp rate cut in November.
  
• BOS Bank saw no notable new information in the statement. They expect another 25bp cut in November.
• Goldman Sachs see the timing of NBP cuts as premature and expect the reaction function to turn more hawkish after the October 15 elections, with further easing delayed until 2024 and no significant further rate reduction next year.
  
• ING write that Governor Glapinski's press conference should be less dovish than last month. In their view, the statement was "almost identical" with the September edition. They expect further interest-rate cuts to 5.5% in December and to 4.75% in 2024.
• JP Morgan write that "the statement says nothing new". Ahead of the Governor's presser, they expect a more careful rhetoric on the zloty. They still expect rate to fall by 25bp a meeting all the way to 4.00%, but may adjust their forecast after today's press conference.
  
• mBank expect one more 25bp rate cut this year and another 50bp of easing in 1Q2024. They note that the statement deployed slightly more dovish messaging, which implies the MPC's confidence in the sustainability of the disinflationary trend, making the use of the word "adjustment" to describe the change in rates rather insignificant. They expect inflation to rebound in 2Q2024.
• Millennium Bank see a very limited scope for further rate cuts at the two remaining MPC meetings this year, but there is potential for another 25bp move in November. They expect further cuts to bring the key rate to 4.50% at end-2024, flagging heightened uncertainty around this forecast. They think that the statement gave no clear indications regarding the future rate path.
  
• Pekao expect the rate-cut cycle to continue, with a 25bp reduction pencilled in for November and the key rate expected to reach 4.00% at end-2024.
  
• PKO write that Governor Glapinski's rhetoric should not be too dovish, while messaging pushing back against further rate cuts could support PLN appreciation. Such messaging could involve a declaration that further rate cuts are not a done deal and will depend on further improvement in inflation data and projections.
  
• Santander interpret the statement as setting the scene for further monetary loosening if inflation keeps falling. On the other hand, the latest adjustment was described as "consistent" (vs. "conducive" previously) with meeting the inflation target in the medium term - signalling reduced scope for cuts. They expect another 25bp rate cut in November, followed by a pause which may last for much of 2024.
• Societe Generale expect rates to remain stable (or rise) after the October 15 elections until at least 2Q2024, noting the the MPC could only mull further cuts if we get a hung parliament. They expect 25bp cuts/quarter in 2Q2024-4Q2024, bringing the key rate to 5.00% at end-2024.