PiS majority, implications for PLN

In Poland, an outright PiS majority is likely to increase downside risks for the PLN, imply lower short-end rates but would be negative for duration. The market is likely to view a decisive result in favour of PiS as providing the green light for an unorthodox policy mix of loose fiscal and monetary policy. 

Although the threat of being placed under the EC's excessive deficit procedure will constrain the government's ability to blow out fiscal targets, fiscal outcomes are expected to worsen relative to the baseline expected under the previous administration. As such, fiscal risk premia should increase and pressure long-end PolGBs. 

"Additionally, the ability to meet fiscal targets will largely depend on boosting growth (nominal and real) aided by a more accommodative central bank. The PLN will likely  bear the brunt of these developments", says Barclays.