“Although the President of the National Bank of Poland devoted a lot of words to discussing why the current situation does not resemble that of 2021-23, the probability of rate increases has increased over the last month,” Pekao economists wrote on the X platform, assessing that Adam Glapiński's Thursday conference was hawkish.
Supporters of higher interest rates are called “hawks”.
See also: Interest rates in Poland. What decision did the Monetary Policy Council make?
Moreover, Pekao economists point out that for two months, the focus of the discussion shifted from rate cuts to rate increasesand increases are possible when inflation exceeds 3.5%. year to year or when projections show this limit being exceeded.
Earlier, Pekao economists raised their projection of the inflation path, estimating that CPI inflation may approach 4% by the end of 2026. year to year.
In a comment after Thursday's conference of the President of the National Bank of Poland ING Bank Śląski economists point to a change in the MPC's attitude to a more hawkish one.
In their opinion, the increase depends on how long inflation will stay above 3.5%. and whether forecasts will show it returning to the target range. However, in their opinion, NBP rates will remain unchanged in the coming months.
“The Council remains in a wait-and-see mode and observes the impact of the energy shock on the Polish economy, but notes an increase in inflation risks,” we read in the commentary.
“The press conference suggests slightly greater caution and increased inflation concerns than suggested by the statement after the May meeting of the Council,” we read further.
According to ING economists, the NBP wants to prevent inflation expectations from becoming de-anchored, which is why the president indicates that the chances of an increase have increased and reductions are not being considered.
See also: Inflation in Poland and the EU. Is it expensive? Compare the latest data
They estimate that NBP rates will remain unchanged in the coming monthsand an important event will be the publication of the July macroeconomic projection, which will outline the prospects for inflation and economic growth in the second half of this year and next year.
“A key element of the MPC's reaction function is how long inflation will remain above 3.5 percent. We still assume the temporary nature of the inflation shock, although ongoing tensions in the Middle East increase the risk of an extended period of high oil and gas prices, with still limited pass-through. Currently, the yield curve prices two rate increases to around 4.25 percent.” – ING analysts say.
During its May meeting, the Monetary Policy Council decided on interest rates in Poland: they remain unchanged. A report from the entire conference by Adam Glapiński is available HERE.
