It is quite interesting that after only 7 weeks after a rate hike of 25bp, a few Polish central bank members have started to talk about a rate cut. Chojna-Duch has mentioned such an option last week. True, she is the most dovish member but still this was an interesting change as till recently she was mainly defending the status quo. This morning, Bratkowski said that a rate cut may be on the cards as downside risks on growth are on the rise. Giving its recent statements, Bratkowski has probably not supported the last rate hike motion and (to be honest) he is not the most “consistent” voting member. But still, this statement says something more about the diverging views within the MPC that the latest MPC minutes have highlighted. Polish central bank faces what the Governor Belka said a few days before the rate hike in May: the risk of monetary policy error. Yet, Belka supported the hike. With this rate hike, not really anticipated or demanded by the market, the NBP has put its credibility at risk. This is not a welcome risk factor for the PLN, which is a pivotal for the inflation outlook and the appetite of foreign investors for Polish assets.
EasyForexNews Research Team