Today marks the end of the two-day rate-setting meeting of the Monetary Policy Council. Market consensus assumes that the MPC will leave interest rates unchanged, keeping the NBP reference rate at 3.75%. After the 25 bp cut in March, the Council will most likely shift into a wait-and-see mode, monitoring incoming data and geopolitical developments. The announcement of a two-week truce between the US and Iran pushed oil and gas prices down from their earlier peaks, although the durability of the agreement remains uncertain, which has at the same time eased some concerns about a renewed and stronger rise in inflation. In addition, NBP Governor Adam Glapiński’s press conference has exceptionally been scheduled for today at 3:00 p.m., so the MPC’s decision is expected earlier in the day.
Although inflation rose to 3.0% in March from 2.1% in February, the jump was largely driven by higher fuel prices. At the same time, the government launched a support package for the fuel market, including a temporary VAT cut to 8%, a reduction in excise duty, and a mechanism of maximum retail prices, which may help limit inflationary pressure in the coming weeks. In this situation, some economists assume that the MPC may keep rates unchanged for a longer period, while the NBP Governor will likely remain cautious in signalling any further steps. Financial markets have shown improving sentiment: on Thursday morning, the euro traded at around PLN 4.2566 and the US dollar at PLN 3.6481, confirming the continued strength of the zloty. Meanwhile, the WIG20 was hovering near 3,526 points, a level not seen since 2007.
Krzysztof Kamiński – OANDA TMS
