National Bank of Poland likely to stand pat in October, inflation to remain above 2.5 pct target until end-2020
The National Bank of Poland is set to meet this week for interest rate decision. According to an Erste Group Research report, the central bank is expected to keep the target rate on hold at 0.1 percent and maintain its dovish stance. The MPC is not likely to follow the steps of the Hungarian central bank, which increased short-term rates in response to the depreciating forint.
Even though the Polish zloty softened recently and the EUR/PLN went above 4.55, the movement is believed to be short-lived and will not result in a reaction from the MPC. This is especially the case because in past months the MPC was worried about a lack of visible adjustment in the zloty in response to the current crisis. Moreover, a surprising rise in headline inflation in September will also be an insufficient argument for monetary tightening, as the MPC is focused on underpinning the economy.
“We expect inflation to remain above the target of 2.5 percent until the end of the year and to begin to ease in 1Q21 due to the base effect. We see monetary policy as remaining flat at 0.1 percent until the end of 2022”, added Erste Research Group.
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