Last week, the Polish Monetary Policy Council (RPP) once again decided not to change interest rates. At a press conference on Thursday, Adam Glapiński announced changes in the guidelines for the future path of interest costs, citing the risk of a price spiral and the possibility of rising energy prices in the fourth quarter of 2025. Since then, a number of entirely contradictory statements have been released by some representatives of the Central Bank. Each expressed the view that such a change of stance would be premature and disproportionate to the actual risk associated with energy prices. The FRA interest rate reacted with increases, and the Polish zloty is showing an evident upward trend. This morning, the Reserve Bank of Australia (RBA) weakened the Australian dollar.
Differing viewpoints are apparent within the Polish Monetary Policy Council. Glapiński spoke with a noticeably “hawkish” tone, officially representing the Council’s position. However, not everyone agrees on how the future path of interest rates in Poland should develop. In an interview with Bloomberg, Cezary Kochalski emphasized that cuts should be seriously considered and that the first reduction should take place in the spring of the following year. Ludwik Kotecki went even further, stating that the Chairman’s words do not reflect the full Council’s views and that he would like to initiate a discussion on easing monetary conditions in March. Henryk Wnorowski and Przemysław Litwiniuk also presented decidedly “dovish” views.
On to the specifics. Inflation in Poland accelerated month-on-month to 0.4 percent, which obviously creates grounds for a cautious approach. Year-on-year, we received a smaller dynamic than the previous month, at 4.6 percent. However, we must remember that the “unfreezing” of energy prices will only happen in the fourth quarter of 2025, when we will be in an environment of lower inflation. Additionally, the trend in the region is emphatically towards looser financing conditions. The growing disparity in rates should be an additional reason why the cost of money will be reduced next year.
EUR/PLN trading is in a crucial area, which is the horizontal technical support outlined by this year’s lows (April, May, July, September) of 4.25-4.26. In relation to the US dollar, the zloty is stronger compared to the extremes seen in November; however, compared to August and September lows (3.80-3.81), the USD/PLN (4.05) rate still has a long way to go.
This morning another central bank was deciding on monetary policy parameters. In Australia, interest rates remained at 4.35 percent. The tone of the accompanying statement was noticeably more dovish, causing a significant weakening of the AUD in the market’s initial reaction. What may have resulted in the depreciation of the AUD is the fact that the RBA acknowledged that economic development is weaker than forecasted, which argues for looser conditions in the future. The central bank changed its phrasing regarding inflation, expressing greater certainty that it will stably steer towards the middle of the permissible fluctuation range (2-3 percent). A month earlier, the bank emphasized that this needs to change for them to discuss rate cuts. The market will now closely observe data (jobs market, CPI) in the coming weeks to estimate what can be expected in February.
Author: Łukasz Zembik, Oanda TMS Brokers.
Source: https://ceo.com.pl/podzial-w-rpp-glapinski-za-utrzymaniem-stop-procentowych-inni-za-obnizkami-71133
