Nbp governors press conference less dovish than in july but still far from market pricing of rate hikes

Key arguments

• The NBP Governor's tone was more balanced than in July, signalling a longer period of stable interest rates rather than the possibility of a cut.
• Market pricing implies around 75bp of rate hikes over the next year, which remains inconsistent with the Governor's stance and ING's baseline.
• Energy prices accounted for half of August headline inflation, so commodity markets — particularly Middle East developments — are now crucial to the inflation path.
• The risk of second-round effects remains low, as consumption growth is slowing and the composition of GDP is becoming less inflationary, with the July wage jump seen as driven by one-off bonuses.
• The MPC statement's forward guidance was almost identical to July despite August inflation at 3.4% YoY versus the 2.5% target, indicating the Governor was unlikely to shift abruptly.
• Fuel markets are beyond the reach of monetary policy; other central banks' hikes reflected their comparatively low rate levels, not a template for Poland.

Corresponding source evidence

1. Following a deterioration in the inflation outlook amid rising energy commodity prices, Glapiński was less unequivocal in his assessment, signalling a longer period of stable interest rates rather than the possibility of a cut mentioned in July.
2. Despite this shift in the governor’s stance, which was in line with our expectations, it still contrasts with aggressive market pricing, which implies that interest rates will rise by around 75bp over the next year. · next year
3. Assessment of macroeconomic conditions and inflation drivers: focus on energy prices While explaining yesterday’s MPC decision, Glapiński noted that inflation remained within the target range, although the latest figure for August was close to the upper limit of the inflation tolerance band.