KBC Market Research Desk
KBC Bank
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NBP sees stable rates at least until the end of 2014H1
First hike might come at the turn of 2014Q3 and 2014Q4
The impact of GDP revisions in Hungary and the Czech Republic on trading was eventually negligible; the koruna slightly fell against the euro despite the marked positive correction of Czech GDP for the third quarter and EUR/CZK pair reapproached a 4½-year low later in the afternoon. On the contrary, the forint and the zloty strengthened against the euro.
Regarding the meeting of the National Bank of Poland (NBP), it delivered more or less expected outcomes. While the central bank acknowledged improving conditions in the domestic economy and its positive consequences for labour market, it added that the demand and cost pressures remain limited. Although Mr. Belka, the NBP president, admitted in a press conference that the pace of recovery may be faster than indicated by current forecast, the NBP kept the forward guidance that the official interest rates should remain at current levels at least until the end of the first half of 2014 unchanged.
Although the recent development has supported our bets on faster economic recovery in Poland (in 2014, the central bank expects 2.9% growth while we estimate 3.1% with upside risks), outlook for persistently low inflation and NBP’s strong emphasis on forward guidance along with the fact that all members of the Monetary Policy Council agreed upon it, made us review our scenario and we newly expect that the first rate hike (25 bps) may come rather at the turn of the third and the fourth quarter of 2014.
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.
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