Poland: NBP stays on hold - to nobody’s surprise

The Polish central bank’s Monetary Policy Council (RPP) yesterday decided in favour of unchanged interest rates, keeping its key policy rate at 4.00%.

Since the decision was completely in line with the market’s - and our own - expectations, it should not have any significant market impact. Furthermore, the Polish markets are likely to be driven more by global than by local factors in the current situation, with risk aversion and volatility on the increase.

The RPP’s press conference at 1600 CET today will give us further information on the outlook for Polish monetary policy.

We expect the RPP to turn a bit more hawkish in the coming period, and it will probably hike interest rates in April-May, as recent data have shown that inflationary pressures are on the rise and that inflation expectations are also mounting. Note also, though, that, since inflation in Poland is still remarkably low, the RPP is unlikely to turn very hawkish anytime soon.

Danske Bank
Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/

Source: By Lars Christensen, fxstreet.com