NBP Governor turns less dovish, remains far from rate-hike pricing
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.
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.
How firms align with this view
Aligned with the desk view
Contrary positioning
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.
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.
Risks to this view
A decisive increase in inflation driven by energy costs could force the NBP to reconsider its stance, resulting in sudden market volatility. Additionally, any unexpected geopolitical developments affecting energy supply could complicate forecasts, influencing currency dynamics.
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 dovish messaging. We maintain our view that rates will remain unchanged until mid-2027, contrary to aggressive market pricing of rate rises Higher energy prices and elevated uncertainty prompted a less dovish tone from National Bank of Poland Governor Adam Glapiński today than in July Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Rafal Benecki Chief Economist, Poland Mateusz Sutowicz Senior Economist, Poland Leszek Kasek Senior Economist, Poland Governor’s stance: more balanced than in July National Bank of Poland Governor Adam Glapiński's first post-summer press conference offered a more balanced assessment of the monetary policy outlook than his dovish comments in July. Following a deterioration in the inflation outlook amid rising energy commodity prices, Glapiński was less unequivocal in his assessment, signalling a longer period of stable interest rates rather than the possibility of a cut mentioned in July.
Despite this shift in the governor’s stance, which was in line with our expectations, it still contrasts with aggressive market pricing, which implies that interest rates will rise by around 75bp over the next year. Yesterday's Monetary Policy Council statement already suggested that the governor was unlikely to shift his policy stance abruptly. It is worth recalling that the passage containing the forward guidance, drafted against the backdrop of August inflation at 3.4% year-on-year, was almost identical to the July version, which had been prepared when June inflation stood at the NBP’s 2.5% YoY target.
Assessment of macroeconomic conditions and inflation drivers: focus on energy prices While explaining yesterday’s MPC decision, Glapiński noted that inflation remained within the target range, although the latest figure for August was close to the upper limit of the inflation tolerance band. He recalled that energy prices accounted for half of headline inflation last month and that the outlook for commodity markets is now crucial to the future inflation path. Glapiński also acknowledged that, because of the conflict in the Middle East, "the future is subject to a high degree of uncertainty." A scenario in which inflation rises above the permitted fluctuation band around the target is therefore plausible.
At the same time, Glapiński acknowledged that developments in fuel markets lie beyond the reach of monetary policy. He argued that the response of other central banks, such as the European Central Bank's rate increases in response to the commodity shock, reflected their comparatively low interest-rate levels. The assessment of domestic inflation drivers suggests that conditions are currently less conducive to inflation becoming entrenched and to the emergence of second-round effects, which have concerned many central banks in light of the pandemic and the war in Ukraine.
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