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Sell Side See Risk of Inflation Running Higher Post-NBP

POLAND
  • NatWest write that the NBP having been winding down market expectations for tightening since June, and therefore the direction of travel for policy will not be easily reversed at this stage. As such, they believe tightening is now finished due to elevated household debt levels, leaving front-end rates mispriced.
  • ING write that the decision was surprising, since September's CPI negated the scenario of inflation peaking in the summer. They see the decision to leave interest rates unchanged as raising the risk of PLN depreciation. They see the tightening cycle as completed and see discussion around possible rate cuts in 2023 to be risky.
  • JP Morgan see the focus shifting abruptly to growth, with high inflation appearing to be accepted. They still think additional tightening will be required, but at this point are inclined to postpone it towards next year, especially as CPI is likely to have peaked in September/October.
  • Goldman Sachs write that the council signalled that given the persistence of shocks that are outside the control of monetary policy, the return of inflation back to target may be more gradual, which potentially signals more willingness to tolerate a more prolonged inflation overshoot. GS no longer think that inflation will peak this year. They see more tightening as warranted in Poland, and maintain their terminal rate forecast of +8.00%.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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