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2018/09/03 / Erste Group Research

Weekly Focus Poland


We expect MPC to maintain key rate at 1.5%, supported by recent data releases. As no major macro data is due this week, bond and FX market will most likely remain under global pressure, given no change in domestic rates. ISM Index is due in US this week, which might have impact on EURUSD and hence influence zloty.

September 5: Target rate expected to remain unchanged. It is broadly expected that the key interest rate should remain unchanged at 1.5%. Recent stabilization of inflation at 2.0% y/y shows that inflationary pressure remains limited, supporting the dovish stance of the MPC. In the coming months, the CPI will most likely drop below recently observed figures, due to a base effect and lower food price dynamics. In our view, the probability of a rate change remains low and the MPC will most likely maintain its dovish stance even until the end of the next year.

10Y yields went up to 3.18%. Over the last week, 10Y yields increased by 0.7%, from 3.15% to almost
3.18% at the end of the week. Significant movement was observed on
Wednesday as the aftermath of the Moody’s decision regarding Turkey.
The spread vs. the 10Y German Bund increased from 275bp at the
beginning of the week to 285bp at the end of the week. As we do not
expect any change in the key rate in Poland, the long end of the curve will
remain under global pressure.

The zloty followed the weakening of other CEE currencies. The zloty was affected by the situation in Turkey and Argentina and
followed the weakening of other CEE currencies last week. The zloty
depreciated by 0.63% WTD and the EURPLN moved from 4.27 to 4.30.
We see the zloty standing in the range from 4.25 to 4.30 in the coming
months. The FX market will most likely remain under global pressure this
week, with the ISM Index publication in the US and possible decision by
President Trump on further tariffs on Chinese products.



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General information

AuthorErste Group Research
Date2018/09/03
Languageen
Product nameCEE Country Update
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-
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