POLAND: MPC's Kochalski & Kotecki Play Down Potential For More Cuts This Year
Oct-13 06:56
- NBP's Cezary Kochalski said he would like to 'cool down the expectations for another rate reductions as early as in November', noting that last week's 25bp cut significantly limited room for further easing this year. In his view, inflation was unlikely to decline to the +2.5% Y/Y point-target amid lingering upside risks, despite staying within the +/-1pp tolerance band. At the same time, Kochalski left some ambiguity around guidance for November, stating that while an on-hold decision was a more probable outcome, the new macroeconomic projection could change his preferences. Prior to last week's meeting, he was leaning toward a move in November, but earlier action was 'safe from the perspective of the future inflation path.' The official is due to leave the MPC in December and his successor will be appointed by President Karol Nawrocki. Meanwhile, his colleague Ludwik Kotecki told TVN24 this morning that the NBP was unlikely to continue loosening monetary policy this year and in his view should monitor the impact of earlier reductions over the next two months as services inflation 'remains a problem'.
- These comments stand in contrast with Governor Adam Glapiński's remarks last week. Glapiński said at his press conference that interest-rate cuts could be continued and there was no reason to keep the reference rate at 4.50% if favourable macroeconomic trends were maintained.
- Separately, MPC's Joanna Tyrowicz, Ludwik Kotecki and Przemysław Litwiniuk have been summoned to testify at an October 22 closed-door session of a parliamentary committee investigating allegations against Governor Glapiński. The three members were appointed by the current governing coalition and on several occasions openly criticised the Governor.
- Speaking at an anti-immigration rally in Warsaw, opposition leader Jarosław Kaczyński introduced ex-Education Minister Przemysław Czarnek as someone who 'has not been Prime Minister yet but probably will be.'
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AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
Sep-12 21:45
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
Sep-12 21:16
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Sep-12 21:07
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
