We expect Poland’s Monetary Policy Council to keep interest rates unchanged this week. However, recent market developments and incoming data may prompt policymakers to adjust their tone, which is likely to result in more cautious and less optimistic remarks from National Bank of Poland Governor Adam Glapiński.
Disruptions in energy commodity supplies are continuing, putting upward pressure on prices. These issues are already reflected in the data. Consumer price growth in Poland in April was clearly higher than consensus estimates, raising fresh concerns about inflation spillover effects.
In light of the latest developments, hopes for further interest rate cuts this year appear unjustified. The key question is whether markets are right to price in monetary policy tightening. For now, we believe such expectations are premature.
Nevertheless, the central bank should proceed cautiously because the ongoing conflict in the Middle East makes inflation risks particularly visible.
