WOOD Flash – Poland macro: NBP shifts to a wait-and-see stance

The Monetary Council kept the reference rate unchanged, at 5.75%, versus the 25bps cut that both we and the consensus expected. The tone in the statement turned slightly more neutral on the GDP prospects and cautious on the outlook for inflation, given the potentially sizeable upside risks due to regulatory measures. It appears that the MPC will remain on hold in the coming months and, if both growth and inflation surprises to the upside, could reduce the policy rate by less than expected previously. In our assessment, the timing of the MPC decisions are influenced by political changes, as well as economic fundamentals; and, for the near future, there is a mild hawkish preference. Given the uncertainty related to the transition between the old and new political administration, a more hawkish NBP could delay the economic recovery. Overall, our best guidance is that interest rates will fall within a range between 4.75% and 4.00% in late-2024E, although we see the lower end as most likely, given the current information.