Headlines

NBP to keep rates on hold for the moment…

… although Polish deflation persists

A strong demand for CE bonds and currencies was evident again yesterday. Yields of regional government bonds were falling; for example, Czech government bond yields with maturities of 5 years and shorter fell into a negative territory. Rally also continued in case of CE currencies. The zloty again tested technical barrier at 4.0 against the euro and the EUR/HUF briefly dipped below 296 (the strongest value since December 2013).

Regarding today’s session, the meeting of the Polish central bank (NBP) together with Polish inflation figures will be in focus. The NBP is likely to leave rates unchanged. After the 50 bps rate cut in March, Governor Belka made clear that monetary easing is over. However, the zloty has strengthened quite significantly since then. The question is whether the NBP - facing a significant inflow of funds from abroad - will change its rhetoric. The strong zloty may continue to keep the economy in deflation for longer than had been previously anticipated and could even undermine inflation expectations.

Lack of inflation pressures in Poland should also be confirmed by inflation figures. We estimate the Polish economy remained in a deep deflation in March. We believe that prices of consumer goods fell by 1.5 % y/y, which corresponds with 0.2 % m/m growth. Just as in previous periods, the price fall was mainly attributable to low oil and food prices. The latter reflects last year’s good harvest.

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD jumps above 0.6500 after hot Australian CPI data

AUD/USD jumps above 0.6500 after hot Australian CPI data

AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside. 

AUD/USD News

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap. 

USD/JPY News

Gold price cautious despite weaker US Dollar and falling US yields

Gold price cautious despite weaker US Dollar and falling US yields

Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.

Gold News

Crypto community reacts as BRICS considers launching stablecoin for international trade settlement

Crypto community reacts as BRICS considers launching stablecoin for international trade settlement

BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.

Read more

US versus the Eurozone: Inflation divergence causes monetary desynchronization

US versus the Eurozone: Inflation divergence causes monetary desynchronization

Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.

Read more

Majors

Cryptocurrencies

Signatures