PL: The NBP is unlikely to change rates

There is every indication that the National Bank of Poland (NBP) will announce the keeping of its reference interest rate unchanged at its current level of 3.5% at its meeting to be held this Wednesday (November 24). The minutes of the Monetary Policy Council (MPC) meeting indicate that great differences persist in the central bankers’ opinions. While some MPC members see the current recovery as sustainable and are afraid of inflationary pressures, the other group argues that, after the one-off effects peter out, consumption will decelerate, evidence of which, according to them, is the slow real wage growth. Recently, the debate has primarily focused on the exchange rate of the Polish zloty. Particularly Governor Belka often reiterates his
concerns about the appreciation of the Polish currency, if interest rates were to be raised.

That said, events that were of interest to more than just economists took place at the Monetary Policy Council during November. Firstly, relatively strong signals indicating a rate hike occurred. Two of the six central bankers who had voted for leaving rates unchanged at the August meeting (the last meeting from which we have detailed information as to how the individual bankers voted) turned from doves into hawks ‘on
the fly’ (Winiecki, Zielinska-Glebocka). Last week, however, their colleague Bratkowski changed his mind in exactly the opposite way, while Anna Zielinska-Glebocka likely concluded that the hawkish garb was not appropriate for her and also returned among the doves. In addition, if we take account of the consistently dovish position of Governor Belka and the latest data from the Polish economy, which sprang no significant surprises, we find that the period of record-breaking low interest rates is likely to persist for at least one additional month. Our scenario currently envisages that a 25 bps rate hike will be announced at the December meeting.
Full report: PL: The NBP is unlikely to change rates