The decision to keep rates on hold should clearly be seem in the light of the fact that inflation remains very low – below 1%. That said, the timing of the next rate hike has clearly been brought forward, mainly due to the following circumstances:

The Polish economy is continuing to expand at an increasing rate, and GDP growth looks set to easily top 5% this year.

Wage growth is clearly accelerating

The currency (zloty) has weakened somewhat of late, and this will contribute to pumping producer price inflation further up in the coming months

The ECB will continue to tighten in the months ahead – as will the central banks in Central and Eastern Europe

Therefore, we also expect the NBP to become more hawkish in the coming months and start to signal that we are getting closer to rate hikes.

SOURCE: Danske Bank