Interest rates frozen until summer? Santander: There will be no changes before July

Any changes to the monetary policy of the National Bank of Poland before July now seem very unlikely – Santander Bank Polska analysts believe. They forecast that retail sales growth for February will amount to 4%. y/y, which would also not accelerate interest rate cuts.

The bank's analysts pointed out that their retail sales growth forecast (4% yoy) is clearly below the median of market forecasts (approx. 6% yoy). “These conclusions are based on the analysis of data on card payments of our bank's customers – which has been quite a good indication of the behavior of retail sales in recent months,” they explained.

If their forecast turned out to be correct, then – as they added – retail sales data “would join the set of arguments for the Monetary Policy Council not to rush the monetary policy response to fluctuations in commodity prices – the weakening growth of wages and consumption would reduce the risk of the so-called second-round effects.” “Either way, any changes to monetary policy before July now seem very unlikely,” they concluded.

They pointed out that decisions on interest rates will be made in the near future by central banks, among others. in Hungary and Norway – in both cases, bank analysts expect rates to remain unchanged. In their opinion, the German iFo (an indicator showing economic activity in Germany) and the preliminary PMI for industry and services “will probably decline under the influence of concerns about the consequences of the conflict in the Middle East.”

Santander BP assumes that EURPLN will remain in the range of 4.25-4.30, and USDPLN will fluctuate around 3.70 – unless “the inflow of new information does not tip the scales towards one of the alternative scenarios.”

“After a series of meetings of central banks abroad, valuations of future interest rates have gone up significantly. Our domestic market has already priced in the risk of three NBP rate increases by the end of this year. The valuation is so aggressive that the risks for the coming days seem to be asymmetric downwards, but ultimately the direction will be determined by the development of the situation in the Persian Gulf,” said the bank's experts.

Moreover, the treasury bond auction scheduled for Wednesday – the first since the attack on Iran – “will be a kind of test of investor sentiment towards the domestic market.” They also do not expect the Moody's rating agency to change Poland's outlook and rating assessment on Friday. (PAP)

jls/mmu/