After Yesterday’s Interest Rate Cut Surprising the Markets, the Council’s Message Was Moderately Dovish, Indicating a Good Chance of Further Cuts in September.
Following yesterday’s interest rate cut—which came as a surprise to the markets—we expected the Council’s message to be balanced by somewhat hawkish comments from Governor Glapiński. Although it is difficult to describe the rhetoric as clearly directional, we regard the tone of the press conference as moderately dovish and see a strong likelihood of continued cuts already in September.
Wednesday’s cut was a clear contrast to Governor Glapiński’s comments at the June press conference, where he spoke about further monetary easing with caution. As he himself noted today, his statements at that time might have suggested a rate cut only in autumn. However, he emphasized that since then, data releases have been positively surprising, allowing the Council to adjust monetary policy somewhat faster. The Governor’s remarks suggest that the decision was unanimous or nearly unanimous. As he stressed: “there were no hesitations about this decision.”
At the same time, the July meeting was special because it was accompanied by new bank projections. While the growth forecasts did not undergo significant revisions compared to March (predicting slightly weaker growth in 2025 and somewhat stronger in 2026–2027), there were substantial changes in inflation projections. Importantly, according to the NBP projections presented by Governor Glapiński, inflation will align with the bank’s target starting in July and—assuming the baseline scenario—should remain at that level in the medium term. The core inflation measure is currently at its lowest level since the pandemic, a point highlighted during the conference.
The Governor did not signal the start of a rate-cutting cycle, but based on the above, one could argue for a somewhat faster pace of cuts. In our view, this scenario is plausible, though there are risks, which the Governor consistently reminded attendees about during the conference. Among the key risks mentioned were fiscal policy, economic conditions, the labor market, and energy prices. The situation regarding the latter should become much clearer by September, potentially reducing uncertainties. We expect at least a partial continuation of the energy price freeze, at least 50 basis points of cuts before year-end, and continuation of the cutting cycle in 2026.
Although from our perspective the meeting was definitely worth attention, Governor Glapiński’s remarks did not significantly affect foreign exchange market quotations. The zloty managed to recover the losses incurred after yesterday’s rate cut announcement, but this occurred before the press conference.
Author: Michał Jóźwiak – Ebury Analyst
Source: https://ceo.com.pl/prezes-glapinski-o-dalszych-krokach-rpp-i-wplywie-danych-na-decyzje-32983
