Poland keeps rate comfortably on hold

The National Bank of Poland (NBP) kept its policy rate on hold at 1.5% as expected. The MPC has collectively and individually assured that no rate change is likely at least until mid-2016, and the next move is more likely to be an increase. Governor Belka assured in the news conference that it is unlikely that the NBP will return to rate cuts. The July statement was almost identical to the June Statement with the exception of reporting new forecasts from the Inflation Report that will be released on 13 July.

"The NBP has reduced its 2015 inflation forecast to -0.8% from -0.5% and increased its 2016-17 forecast to 1.6%. It must be noted that this brings inflation just inside the 1.5-3.5% target, and therefore does not argue strongly for rate hikes. Growth forecasts have been increased by about 0.1% per annum to 3.4-3.7% during 2015-17. The NBP explicitly indicated that it does not expect acceleration in growth in Q2 compared with Q1", says Barclays.

It is believed, that the forecast of NBP will stay on hold during the next year. PLN depreciation takes pressure off the NBP to cut rates further, as does the slight increase in inflation. On other issues, Governor Belka indicated that he thinks Poland financial markets are not very vulnerable to Greece-related instability. He did not comment on the Civic Platform plan to partially convert CHF-denominated loans into PLN, notes Barclays.