NBP Governor turns less dovish, remains far from rate-hike pricing
At a Glance
The desk posits that the National Bank of Poland (NBP) will maintain its interest rates until at least mid-2027, despite indications from Governor Adam Glapiński of a less dovish stance amid rising energy prices and inflation concerns. Per the full note , while Glapiński's tone has shifted toward cautious optimism, he still does not endorse imminent rate hikes, deviating from market expectations that predict approximately 75 basis points of increases over the next year. Given this backdrop, the current consensus of unchanged rates aligns with our outlook as we closely monitor inflation data and energy prices, which are key drivers of the NBP's policy considerations.
Key Takeaways
- 01Governor Glapiński has softened his dovish stance but does not foresee immediate rate increases.
- 02Rising energy prices are exerting upward pressure on inflation, complicating the NBP's decision-making process.
- 03Market expectations of 75 basis points in hikes over the next year may be excessively aggressive given the NBP's current guidance.
- 04Current consensus maintains a stable policy rate outlook amid uncertainty in inflation and macroeconomic conditions.
Full Analysis
What the desk is arguing
The desk maintains that the NBP is unlikely to alter its policy rate until at least mid-2027, with Glapiński's recent comments reinforcing this view. Per the full note , this cautious outlook is largely a response to the pressures from rising energy costs, which have negatively influenced the inflation trajectory in Poland.
Supporting evidence shows Glapiński's toned-down rhetoric acknowledges the recent uptick in inflation, which peaked at 3.4% YoY in August, up from 2.5% YoY in June. This inflationary backdrop contrasts with a market that has begun factoring in potential rate hikes, leading to expectations of increases over the next year.
The alternative read would be that the market's aggressive positioning on anticipated rate increases could leave room for volatility if the NBP continues to emphasize a prolonged period of stable rates, thereby constraining any hawkish surprises.
Where it sits in our coverage
Our consensus target for EUR/PLN is 1.075, with a range reflecting expectations from various institutions. Specifically, we note the following targets: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This analysis aligns with bofa's target on the low end of the spectrum, while jpmorgan positions at the upper limit, reflecting a divergence in outlook based on macroeconomic forecasts.
How other firms see it
Aligned firms like jpmorgan project a more cautious trajectory for the NBP in line with our assessment, while bofa presents a contrary stance by expecting earlier rate increases. This contrast highlights differing views on the impact of rising energy prices and inflation metrics on monetary policy.
Monitor the EUR/PLN for fluctuations indicative of NBP sentiment shifts, as well as inflation trends that could either validate or challenge the current policy stance, particularly around energy prices and their interplay with the broader economic context.
Market Implications
Traders should closely watch the EUR/PLN for potential shifts in the NBP's positioning as macroeconomic indicators evolve. If inflation strengthens beyond expectations, market sentiment might rapidly adjust, necessitating a reassessment of the rate outlook.
From the original
Older quick take Quick take Published 16:25 Poland NBP Governor turns less dovish, remains far from rate-hike pricing Shifting circumstances, including higher energy prices and elevated uncertainty, prompted a more balanced tone from the NBP Governor today than July's extremely d
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