Can the MPC surprise at all? What about the zloty?

The Bloomberg consensus says clearly - no one expects any other move from the Monetary Policy Council today than keeping interest rates unchanged. Moreover, such a decision was clearly communicated by Council members already in the previous months. Can the MPC surprise at all? Will Professor Glapiński give a signal about possible reductions later in the year?

The market does not expect any changes

Before us is a decision about which there is no doubt. The consensus is that there is no change, this was well communicated and the data do not suggest either a need for an increase or an expected reduction. Therefore, the market's attention will focus on details. It is difficult to expect changes in the statement, but if they happen, it could mean readiness for a rate cut in March. It is worth saying, however, that the Monetary Policy Council does not yet have inflation projections at its disposal, and additionally, we did not have a quick estimate of inflation in January. Therefore, there is no justification for even making changes to the announcement.

Moreover, the market is changing its expectations for maintenance interest rates at a high level for a long time. Now the market expects no changes in the next 3 months and less than two reductions in the next 6 months. However, everything may change with the publication of new projections or with the authorities' decisions regarding administered prices. Maintaining the status quo and no communication of future reductions however, it may strengthen the position of the Polish zloty. Today's decision should be published around 14 or 15 p.m.

Data with hopes for recovery

This morning we learned more important data from Germany, which does not give us much cause for optimism yet. Industrial production fell by 3,0% y/y in December, slightly more than expected but less than the previous level of -4,3% y/y. On the other hand, on a monthly basis, production fell by as much as 1,6% m/m, much more than expected. Of course, yesterday's data on industrial orders give hope for recovery, as orders increased by as much as 9% m/m. However, this is related to one-off large orders, in this case in the aircraft and railway sectors. However, it cannot be ruled out that this will also have a positive impact on the rest of the economy.

This morning we are observing the weakness of the dollar. USD/PLN is quoted at PLN 4,0390, for euro we pay PLN 4,3477, for pound PLN 5,0977, for franc PLN 4,6366.

Source: Michał Stajniak CFA, XTB