Commerzbank’s Tatha Ghose expects Poland’s NBP to leave rates unchanged at 3.75% and sees the key question as whether the MPC formally drops earlier dovish language. With fuel-driven inflation pressures and a weaker Zloty, he argues that Glapinski’s prior hints at imminent cuts are obsolete and that rate reductions are unlikely before year-end, which could modestly support PLN.

NBP shift from dovish to cautious stance

“Poland’s National Bank (NBP) will announce its September monetary policy decision later today and hold its usual press conference tomorrow: the analyst consensus is unanimous that the base rate will stay unchanged at 3.75%. This outcome is now unsurprising. The more interesting question is no longer whether NBP will cut the rate, but whether or not the MPC will formally move away from the dovish language which Adam Glapinski had introduced at the July press conference.”

“Glapinski had then described himself as “decidedly dovish” and openly floated the possibility of a 25bp cut motion at the September sitting if no fresh shock were to arrive. But the shock did arrive. Middle East tensions have escalated again, oil prices have risen, and the reversal of the fuel VAT cut on 1 September has produced a sharp jump in Polish pump prices.”

“Reflex data showed petrol prices up by 18.3%w/w and diesel up by 14.4%w/w as of 3 September, with further increases likely. This means that fuel will give another major boost to September CPI.”

“Even before this latest fuel move, the inflation picture had already turned less comfortable. CPI inflation accelerated to 3.4%y/y in August (our preferred seasonally-adjusted month-on-month rate of increase has accelerated the fastest in Poland among CE3 and has breached the 2.5% target level in the past two months). Against this backdrop, Glapinski’s earlier signal about rate cuts being imminent became obsolete.”

“While the shift from dovish to cautious was forced rather than proactive, we reckon that rate cuts are now off the table through year-end in our view. An official signal to this effect will likely modestly support the exchange rate.”