Poland’s MPC to continue with 25 bps rate cuts but uncertainty grows (opinion)
Poland’s Monetary Policy Council is expected to proceed with standard 25 basis point rate cuts, though economists highlight increased uncertainty over the timing and scale of further decisions after a rather hawkish overtone of Poland's central bank NBP governor's Thursday press conference.
"This was probably the first and last cut of more than 25 basis points. In the coming months, the MPC, regardless of when it happens, will move in standard steps of 25 basis points per meeting," economists at Pekao lender assessed.
They pointed out that what is interesting, is that while the Thursday's cut was seen as an adjustment, future reductions would be treated as part of a cycle.
Pekao analysts also said that the path to lower rates has become "bumpier, but not necessarily longer," and that they still expect a total reduction of 100 basis points this year, with the next cut likely in July, followed by further cuts after the summer.
The economists at Poland's state development bank BGK assessed that the tone of NBP governor Adam Glapinski’s Thursday conference was not dovish.
They pointed out that Glapinski had said it was doubtful the Council would risk a decision next month and suggested that a hypothetical cut could occur in July or autumn, likely marking the start of a cycle with single moves of 25 basis points.
The economists of listed lender Millennium argued that the probability of a July cut is now lower than previously thought, and that further reductions are more likely in the autumn.
"The Council's subsequent decisions will be determined by incoming data from the economy, in particular the CPI inflation and wage growth readings will be key," they pointed out.
"We maintain our assessment that the reference rate will be cut to 4.50 percent by the end of the year from 5.25 percent currently, although the timing and scale of further cuts remain uncertain," they added.
Governor Glapinski stated during the press conference that, based on the statements of Council members at the May meeting, if the MPC decided to continue lowering rates in July or autumn, the majority of members would support a cycle. He added that 25 basis point moves are more convenient for the central bank than 50 basis point adjustments.
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