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2020/04/06 / Erste Group Research

Poland Weekly Focus | MPC to remain on hold

After rate cut in March, we expect MPC to keep target rate unchanged at 1.0%. Further easing is likely this year. Unemployment rate for March should be released by Ministry of Family, Labor and Social Policy. Markets continue to watch COVID-19 developments.

April 8 | Monetary policy to remain stable. After an emergency 50bp cut delivered on March 17, we expect the central bank to remain on hold and keep the policy rate stable at 1.0%. We believe that the central bank is likely to pause with further easing until the new growth projection is available (due in July). It will be, however, important to see how the expectations of the MPC regarding the economic outlook have changed to determine the likelihood of further easing. If recession is anticipated sooner than July, we cannot exclude the central bank taking action prior to July.

April 6-10 | Unemployment rate for March. In the upcoming week, the Ministry of Family, Labor and Social Policy will release the unemployment data for March. We expect the unemployment rate to sharply increase to above 7% due to the lockdown of the economy.

Bond market drivers | Yields remain broadly unchanged. Over the course of the week, the 10Y LCY yield moved within a band of 1.65-1.8%, while the 10Y German Bund increased from -0.55% to -0.4%. As a result, the spread narrowed further, toward 205bp. The 2Y and 5Y yields remain stable around recent levels of 0.9% and 1.3%, respectively. The MinFin held a T-bill auction on Monday, April 6, and sold PLN 2.9bn of T-bills maturing in 19W and 51W.

FX market drivers | Zloty stabilized somewhat. In the first half of the week, the zloty lost some of its recent gains and depreciated back towards 4.60 vs. the EUR. Afterwards, the EURPLN firmed around 4.57. As the US dollar continues to appreciate, it puts pressure on the zloty. The central bank meeting and the discussion regarding the presidential elections in Poland could attract some market attention this week and influence the EURPLN.

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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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