MNI NBP WATCH: Cut In Balance As Uncertainty Grows on Iran

The likelihood that Poland’s central bank will press ahead with a 25-basis-point interest rate cut on Wednesday has been reduced by the market reaction to the U.S.-Israeli attack on Iran, raising the possibility that it will continue the pause in its easing cycle which it began in January. (See MNI EM NBP WATCH: Rates Unchanged As Inflation Approaches Target)

Market consensus before the weekend was for a quarter-point cut to 3.75%, as CPI inflation fell from 2.4% in December to 2.2% in January, and amid slowing economic activity and declining rates of pay growth. Governor Adam Glapinksi said March’s inflation projection was expected to show price growth on target “through the end of this year, perhaps even next year.”

But policymakers have previously emphasising caution, and highlighted global commodity prices as a potential source of upside inflation risk.
The NBP cut rates by 25 basis points at four consecutive meetings last year, but stood pat at 4.0% in January and February.