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2019/09/09 / Erste Group Research

Poland: Weekly Focus

Central banks in focus this week. MPC expected to keep target rate stable at 1.5%, while ECB most likely to deliver monetary stimulus. Uncertainty regarding Brexit and upcoming ECB decision to be key drivers of bond and FX market. If ECB disappoints market expectations regarding size of stimulus, we could see a reaction from EURUSD and zloty.

September 11: MPC to keep rates unchanged. We expect the MPC to keep the policy rate stable at 1.5%. We think that the MPC will sustain its dovish rhetoric and will most likely reiterate that the current inflation level is not worrisome. All in all, low inflation in the external environment and the expected monetary easing to be announced on September 12 by the ECB will support the stability of rates in Poland. We expect that the MPC will keep rates at record low levels until the end of 2020 or beyond.

September 13: Flash inflation to be confirmed. We expect that the flash inflation estimate for August will be confirmed at 2.8% y/y (0.0% m/m). In our view, headline CPI will move within the upper bound of the target until year-end and will most likely peak at the end of 1Q20. Uncertainty regarding energy price development next year and the base effect could shift inflation above 3.5% in 1Q20.

Bond market drivers: 10Y yield followed core markets. Over the course of the week, the 10Y yield increased to 2% on the back of improved global sentiment and the somewhat lower risk of hard Brexit. As a result, the spread vs. the 10Y German Bund widened to 265bp.

FX market drivers: Zloty took breath and went stronger. Last week, the zloty strengthened and the EURPLN closed the week marginally below 4.34. The zloty followed other CEE currencies and benefited from the improved global mood. The better than expected PMI for August could have also support the zloty. The ECB meeting will be the key event for the zloty this week.

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General information

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


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