POLAND: MNI NBP Review - May 2025: Toning Down Dovishness
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Executive Summary:
- The NBP reduced rates by 50bp in its first cut since October 2023.
- The decision was framed as an “adjustment” rather than first step in a cycle.
- Governor Glapiński guided that the central bank will likely pause in June.
The National Bank of Poland (NBP) reduced the reference rate by 50bp and framed it as an “adjustment” rather than a start of a cycle. Despite acknowledging familiar disinflationary dynamics, Governor Glapiński used his press conference to tone down expectations of aggressive monetary easing. He firmly guided towards a pause in June, while suggesting that the next cut could be delivered in July or after the summer, depending on incoming data. He also conceded that the next move in rates will likely start a cycle of cuts, but easing will likely be delivered in standard 25bp increments. In a surprising twist, he said that the Monetary Policy Council (MPC) will next month discuss adjusting the parameters of reserve requirements and could also debate changes to the interest-rate corridor.
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STIR: Growth Concerns Support Euribor; Monday's High Contains Upside In ERZ5
Monday’s high of 98.335 has contained upside in ERZ5 for now, with the contract +10.0 ticks at 98.310 at typing. Clearance of Monday’s high would mark the highest level since August 2022, and expose trendline resistance drawn from the January 2024 high (98.3705 today) as the next topside target.
- Euribor whites are 4.0 to 10.0 ticks higher, while blues remain weaker alongside core FI, down 0.5 to 4.5 ticks.
- The announcement of fresh Chinese retaliation against US tariffs has exacerbated existing global growth concerns. Brent crude and natural gas futures have seen an associated sharp pullback, which has fed through into EUR traded inflation metrics.
- Together, this has allowed the market to re-position for a more aggressive ECB easing cycle.
- Hawkish comments from ECB’s Holzmann were fully in line with his previous stance, with more attention paid to dovish rhetoric from Rehn, Villeroy and Escriva earlier (alongside a dovish Reuters sources article referencing the larger-than-anticipated growth hit caused by the US tariff announcement).
- Earlier today, Morgan Stanley adjusted their ECB call to a 1.5% deposit rate by year-end (compared to June 2026 in their prior forecast).
- ABN AMRO remain at the dovish end of the analyst spectrum, expecting 100bp of rate cuts across the next four meetings to a terminal of 1.50%, with risks skewed towards more easing.
EURGBP TECHS: Continues To Appreciate
- RES 4: 0.8715 The Dec 28 ‘23 high
- RES 3: 0.8700 Round number resistance
- RES 2: 0.8683 1.764 proj of the Mar 3 - 11 - 28 price swing
- RES 1: 0.8660 Intraday high
- PRICE: 0.8646 @ 14:03 BST Apr 9
- SUP 1: 0.8470/0.8415 Low Apr 7 / 20-day EMA
- SUP 2: 0.8377 50-day EMA
- SUP 3: 0.8316 Low Mar 28 and a key near-term support
- SUP 4: 0.8299 Low Mar 5
EURGBP continues to appreciate as the impulsive bull rally accelerates further. A key resistance at 0.8625, the Aug 8 ‘24 high, has been cleared. The breach highlights another important technical break and strengthens a bullish condition. Sights are 0.8683 next, a Fibonacci projection. Firm support lies at 0.8415, the 20-day EMA. Note that the cross is in extreme overbought territory, a pullback would allow this condition to unwind.
BUNDS: Block trade
Bund Block trade, suggest buyer:
- RXM5 6k at 130.41.
