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2019/12/02 / Erste Group Research

Poland Weekly Focus | Central bank to stay on hold

Last central bank meeting this year should be non-event. MPC will likely keep dovish stance, as growth is cooling down and inflation remains under control. FX market is digesting Supreme Court ruling on CHF loans.

December 4 | Rates to remain stable. We expect the MPC to keep the key interest rate flat at 1.5% at the last meeting this year. In light of the slowing economic growth and inflation holding within the target, the rhetoric of the central bank will likely remain dovish. However, recent comments from MPC members have shown mixed expectations, ranging from a 50bp cut in the case of a more severe slowdown to a 15bp hike in order to curb the risk of a real estate market bubble. We see stability of rates as the most likely scenario until the end of 2021.

Bond market drivers | 10Y yield moves below 2.05%. The Polish 10Y yield stayed in a downward trend almost throughout the whole trading week, falling 10bp towards 1.95%. At the end of the week, following core market increases, the 10Y yield went up by roughly 5bp. This week, the US market will be in focus, with the ISM Index and publication of the Labor Market Report. The data could add some optimism, but the reaction on the market should be limited. The Polish 10Y yield should remain around recent levels. We see the 10Y yield at 1.95% at the year-end.

FX market drivers | Supreme Court ruling pushed zloty up. Over the course of the week, the zloty depreciated by 0.5%, on the back of the negative sentiment, especially the ruling of the Polish Supreme Court on the CHF mortgage. The ruling allowed the conversion of the loan into PLN with the original exchange rate and keeping it linked to the LIBOR rate. Markets reacted abruptly and the EURPLN went above 4.32. The increase was short-lived, as the EURPLN recovered on Friday and closed the week around 4.31. We still see the zloty at 4.30 at the end of the year.

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General information

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


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