NBP seen ‘on hold’ today – TDS

Prashant Newnaha, Rates Strategist at TD Securities, expects the Polish central bank (NBP) to keep its monetary policy unchanged at today’s meeting.

Key Quotes

“In line with the unanimous expectation we expect the NBP to keep its policy rate on hold at 1.5% today”.

“Headline CPI inflation was running at -1.0% Y/Y in May, having been in negative territory since July 2014”.

“However, the MPC takes the attitude that the deflation is caused by external factors, such as low commodity prices which cannot be influenced by NBP rate policy”.

“Governor Belka recently said that a Polish rate at 1.5% means that there is a “war chest”, i.e. the MPC can cut if the economy shows signs of weakness.  So, unless the Polish economy slows, which we do not expect, the NBP will remain on hold”.