Snap11 July 2018Updated 10 months ago

Poland: NBP rates unchanged. Expect a dovish inflation report

The NBP Inflation report should present a substantially lower CPI and core path. We see the governor's forward guidance for rates flat at least into 2020 as very safe.


The MPC left interest rates unchanged, in line with wide market expectations. We expect its press conference (4.00CET) and July Inflation report to be dovish – core inflation and CPI forecasts should both be trimmed by approximately 0.5ppt. The NBP is also likely to present a less enthusiastic stance on growth as downside risks to sentiment in the Eurozone have intensified.

The March inflation report showed CPI forecast at 2.1% YoY in 2018 and 2.7% YoY in 2019. Such figures relied on an assumption of steady core inflation pick-up. The dynamics in this group had been expected at 1.6% YoY and 2.6% YoY, respectively. One quarter after the report was released, both forecasts are now perceived as too high – according to the Polish Press Agency (PAP), the consensus of local economists has shifted towards CPI at 1.6% YoY in 2018 and 2.2% YoY in 2019. We expect NBP projections to converge towards median expectations, slightly above our sub-consensus call (1.4% YoY). In our opinion econometric models could tend to overestimate the core inflation recovery.

The NBP is likely to point out lower long-term growth prospects related to a likely slowdown in Eurozone economies. We expect the 2020 GDP forecast to be trimmed from 3.6% YoY to approximately 3%

Overall the dovish inflation report should confirm that NBP governor Adam Glapinski’s forward guidance of rates flat until 2020 is safe.