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Polish Rate Cuts To Be Resumed

ByDanske Markets
Published 11/04/2012, 01:48 AM
Updated 05/14/2017, 06:45 AM
Impossible to postpone Polish rate cut any longer

A month ago the Polish central bank (NBP) disappointed the markets by not cutting its key policy rate but next week we think the NBP will finally deliver. Indeed, the NBP has now fallen somewhat behind the curve in our view. The consensus expectation is also for a rate cut of 25bp to 4.50%. So now is the time for the NBP to act and if the NBP fails to deliver next week then the economy is likely to slow even further. Then it could not be ruled out that the Polish economy would enter recession in 2013. This is certainly not our main scenario but the NBP has to deliver to avoid recession.

Russian inflation growth is cooling down
Yet, y/y inflation remains higher than Russia's central bank target. In the middle of October, the CPI climbed up to 6.8% y/y, from 6.6% in September. We expect October inflation to stay at 6.8% and the 2012 figure to settle under 7% y/y. However, we do not exclude Bank Rossii hiking 25bp in the first 10 days of November pushing its refi rate to 8.50%.

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