Poland: Time to pretend

• The rhetoric of Polish central bankers has become much more hawkish recently and it does not seem unfounded to ask whether we could see an interest rate hike at the MPC meeting starting today.
• A call for a tighter monetary policy in Poland has been connected with PLN weakness until early January, the still excessive level of current inflation and the stronger than expected resilience of the domestic economy to crisis abroad.
• We think that a need to contain elevated inflation expectations justifies hawkish rhetoric (pretending a hike is just around the corner), but a policy tightening is less likely than a rate cut this year.
• Recent gains of the PLN and more appreciation expected by us later in the year will do its job, lowering inflation.
• While we think rate hikes are unjustified, stronger than expected performance of the Polish economy means that our forecast assuming reduction in NBP interest rates in H2 2012 is at risk. 

Latest research

Swedish Week Ahead No 21

Published date: 17 May 2013 | Analysts: Torbjörn Isaksson, Andreas Jonsson

Temporary lower unemployment in April NSI: CPI significantly lower than forecasts

The fight against TRY strengthening continues

Published date: 17 May 2013 | Analyst: Annika Lindblad

The credit rating upgrade by Moody's to investment grade is of course good news and a significant step for Turkey. However, a credit rating upgrade raises expectations of further capital inflows. This puts further strengthening pressure on the TRY and more pressure on the CBRT to control it, until the economic outlook brightens.

The end of May will be very tough for the market participants

Published date: 17 May 2013 | Analyst: Dmitry Savchenko

Exporters will be in the focus on the next week as tax payments are coming. RUB will get extra support and thus it will help to resist external risks which are increasing. US economic data continued to disappoint -the Philadelphia Fed manufacturing index fell from…