Poland: Too early for NBP to join the hawkish camp – Danske Bank

Chief Analyst, Jakob Ekholdt Christensen at Danske Bank, expects the National Bank of Poland (NBP) to keep its benchmark rate unchanged amid the weak inflation prints in May and June.

Key Quotes

“In our view, it may raise its forecast of real GDP from 3.7% to 4.0% for 2017, while lowering its inflation projections.”

“The possibility of higher wage growth and hence core inflation has increased since the Polish parliament changed the rules applying to workers from the east.”

“The Monetary Policy Committee (MPC) is likely to signal unchanged rates until end-2018, as at the previous meeting. The market is currently pricing 30% for a 25bp rate hike by end-2018, which in our view is too soft.”

“EUR/PLN has moved higher amid a weakening global risk sentiment, a more hawkish tone from the ECB and weak inflation prints in Poland. We expect support for the PLN in H2 17.”