Macroeconomic Forecast Poland

In line with market expectations, the National Bank of Poland (NBP) kept its main policy rate on hold at 3.50% at the July 29 monetary policy meeting, having slashed 250bps since October 2008. The NBP cited the tentative improvement in global economic conditions and still elevated inflation rate as reasons for holding fire on further cuts for now. Though we still have a further 75bps of monetary easing currently penciled in, we caution that the emergence of positive Q2 GDP data, along with a still stable zloty, would greatly reduce the need to cut rates further, in our view, and would necessitate a revision to our end-year target (currently 2.75%).

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