Poland is waiting for a double cutting rate. Here are Citi forecasts

Citi economists revised the forecast of the foot path. NBP and currently expect cutting a reduction in the cost of money each 50 pb. in May and July and by 25 PB. in November – the bank report was given. In 2026, in their opinion, the main foot may drop to 3.5 percent, with risk down.

“Our new interest rate path assumes much faster discounts and a slightly lower target rate compared to the previous scenario. We assume that the feet will be reduced by 50 pb. In May and July and by 25 pb. In November (…) 3.75 percent. At the beginning of 2027, the risk remains down, because the nominal interest rate of 3.5 percent would still mean a relatively high real interest rate ” – it was written.

“The fact that representatives of the Central Bank began to openly discuss the possibility of foot movements greater than 25 PB. It is also an important signal of the evolution in monetary policy in recent weeks. In our opinion, the MPC members would not even start such a discussion if there was no intention to quickly start loosening the monetary policy. In this situation, we think that the most likely scenario is the reduction of the foot by 50 pb.” Added.

Citi experts point out that when changing RPP rhetoric, the RPP did not pay much attention to the risk of disinflation related to customs issues.

“In our opinion, over time, this risk may begin to play a greater role. Very high American duties on Chinese goods and relatively high (10 percent) duties on products from other countries mean that the scenario of trade redirect to Europe is becoming more and more likely. Our base scenario assumes that by the end of 2026 the Headline CPI may amount to about 2.5 percent, but in the case of increased competition from increased competition Chinese products can approach up to 2 percent.

The NBP reference rate has been 5.75 percent since October 2023. (PAP Biznes)

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