KBC Market Research Desk
KBC Bank
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NBP on hold as expected, but it does not like government plans to convert FX mortgage loans into zlotys
CNB’s Tomsik: intervention regime extended untill 2017?
Yesterday, a regional eye catcher was a meeting of the Polish central bank (NBP), which, however, brought no surprises. The NBP left interest rates unchanged as expected and hinted that it should stay so in the rest of this year (which is, in our view, likely scenario). The most interesting news could thus have been a relatively strong critique of government plans to convert FX mortgage loans of Polish households into zlotys; let us recall that government plans that banks should bear the majority of conversions costs which could, according to NBP President Belka, undermine the stability of Polish banking sector.
Nevertheless an interesting message came from other regional central bank as Czech Bank Board member Vladimir Tomsik posted an opinion on the CNB’s blog, which raises a possibility to extend the current regime of FX interventions beyond the end of 2016. To be more specific Tomsik wrote that the CNB might continue the intervention regime beyond H2 2016, due to lower growth in China and other deflationary factors (related primarily to drop in commodities). While we take Tomsik’s opinion seriously, we still think that the CNB will exit from the current monetary/FX regime in the second half of 2016, but China is definitely a risk factor for timing of such a key policy step.
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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