adam glapinski

Cautious tone of Polish MPC Governor press conference

The NBP president's conference was short and cautious in its tone. The NBP may be heading in the direction of the conservative Czech National Bank. In our view, rates will remain unchanged until at least March 2024


Weak global economy, signs of recovery at home

During his press conference, the NBP Governor Adam Glapinski assessed that the data received since the previous MPC meeting does not fundamentally change the assessment of the economic situation and its outlook. The external environment remains weak. The Eurozone is in stagnation and activity in Germany is declining.

In Poland, economic activity remains subdued, but there are increasing signs of recovery. After declines in 1H23, 3Q23 saw GDP growth of 0.5% YoY. According to. Glapinski, the economy is beginning to improve.

Global inflation is subsiding but still remains elevated. Major central banks, including the Fed and ECB, are keeping interest rates unchanged.

Governor of NBP Prof. Adam Glapiński answers questions Global Risk Regulator's questions - Physical cash

Governor of NBP Prof. Adam Glapiński answers questions Global Risk Regulator's questions - Physical cash

Finance Press Release Finance Press Release 17.12.2021 10:10
The National Bank of Poland has strongly supported the right for consumers to carry on using physical cash - can you explain why that is and what is happening on the legislative front in this area? The uninterrupted, safe and stable operation of the payment system is the foundation of a well-functioning economy, which is why the central bank actively supports it, both in the area of cash payments as well as cashless transactions. These two areas are of great importance, complementing each other, and at the same time creating the possibility of making payments in the preferred form. Cash is still widely used, both in Poland and in many other countries. Citizens still want to use this form of money, which shows that the elimination of cash would be contrary to social expectations and public interest. At the same time, we are fully aware of the significant role of cashless payments in the modern world and we support their development. This is why we also have a very well-developed cashless payment system in Poland. However, the financial system, and in particular the central bank, cannot discriminate against people who prefer cash payments, and in particular, cannot exclude such people from economic transactions. Therefore, to ensure equilibrium, the central bank must continue to meet the demand for cash, which constitutes legal tender. Moreover, we should not forget the very important role of cash in crisis situations, such assystem failures or cyberattacks. In such situations, cash enables the smooth settlement of payments, prevents market panic, and strengthens citizens’ confidence in the state. Following the outbreak of the pandemic, demand for cash rose significantly in Poland. At the same time, there were numerous cases of refusal to accept cash, both in shops and in public offices for the settlement of public-law liabilities, which should not take place. This is why NBP has prepared the National Cash Security Strategy, which defines the course of action in the field of broadly understood security,  accessibility of cash and its acceptability as legal tender. This document was created on a voluntary basis by all interested parties, starting from central government offices, to cash processing and cash-in-transit firms, independent cash machine operators, banks and Polish Post. In the field of cash acceptance, thanks to the active involvement of the institution that I head, statutory regulations have already been introduced. At my request, President Andrzej Duda proposed an amendment to the Act on Payment Services. Since November 2021 there has been a legal obligation, with few exceptions, to accept payment with the use of banknotes and coins issued by NBP. This will ensure that Poles have a choice regarding the payment method and will prevent financial exclusion of social groups, which is something that cannot be allowed to happen.
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Poland’s central bank expects rapid disinflation, rate cut discussion premature

ING Economics ING Economics 09.02.2023 23:32
At today's press conference, National Bank of Poland President Glapiński outlined a scenario of rapid disinflation after the first quarter, but stressed that at the current juncture any talks about rate cuts would be premature. At the same time Glapiński gave many arguments to show he accepts single-digit CPI that is far from the target President of the National Bank of Poland, Adam Glapinski Current inflation President Glapiński repeated his earlier assessment that January and February will bring increases in inflation. He also stated that inflation remains high, although its average level in the first quarter will be slightly lower than the NBP expected in its November projection. According to the NBP, the main reason for the currently high inflation is expensive energy. On the top of that, the jump in costs is spilling over into other categories of the inflation basket causing core inflation to rise. External environment President Glapiński noted that the global economic situation is deteriorating and GDP growth in the world economy in 2023 will be significantly lower than in 2022. The weakening is due to high energy and commodity prices. At the same time, the risk of gas shortages in Europe has clearly decreased. The most pessimistic scenarios have not materialised and the economic outlook for the European economy has improved somewhat. Global inflation remains high, although it has started to decline in many countries. The decline in inflation is taking place thanks in part to easing tensions in global supply chains, falling commodity prices and softer demand demand. The purchasing power of firms and companies is declining, reducing inflationary pressures. Domestic inflation outlook In Glapiński's view, there will be a rapid decline in inflation after the first quarter, to around 8% on average in the fourth quarter. According to the NBP president, headline inflation may fall to 6% year-on-year in December and that would be close to levels that are hardly noticed by consumers. Glapiński pointed out that this is not the final policy target and that in the following years the NBP will aim to bring inflation as close as possible to 2.5% (NBP official target). Read next: Craig Erlam about UK inflation: It's expected to fall considerably this year, as per BoE forecasts, but as we've seen over the last 12 months, we live in unpredictable times| FXMAG.COM Monetary policy outlook On the one hand, during the press conference, the NBP president said that the current level of NBP interest rates (6.75%) is adequate to bring inflation down to the target. He also reiterated on a couple of occasions that it is too early to talk about rate cuts and that the Council has not closed the hiking cycle, not least because there is uncertainty as to how prices will behave in January and February. He also stressed that the NBP's target for inflation is 2.5% +/-1 percentage point. On the other hand, the rest of the communication on the NBP's inflation target was vague and unconvincing. The NBP president has stated several times that single-digit inflation is acceptable. At the same time, he pointed out that countries wishing to have a rapid GDP growth must accept higher inflation. In our view, this communication indicates that a fall in CPI inflation alone, even if core inflation remains stubbornly high, could be a serious argument for starting a discussion on cuts within the Monetary Policy Council. In Glapinski's view, more on this subject could be discussed in May or June. We see increasing odds of the first rate cuts before the end of 2023. Summary In our view, the launch of easing cycle before the end of 2023 would be a premature action with the risk of entrenching high inflation expectations, which can effectively delay the timing when CPI reaches the 2.5% YoY target. The decline in inflation over the course of 2023 and the recent improvement in the inflation outlook are caused by the reversal of two major shocks – pandemic and war/energy. The domestic inflation outlook is still far from satisfactory. We see several compelling arguments against rate cuts in 2023: (1) at the end of 2023, core inflation should still be a couple of times higher than the target, (2) history shows that lowering inflation from 20% to 10% is much easier than from 10% to 2.5%. A drop in CPI to single digits in the fourth quarter should be caused by the reversal of supply shocks, which, after all, are out of the NBP's control. Moreover, the structure of inflation at the end of 2023 indicates, with the largest contribution of high core inflation being risky for price stability, that high core inflation reflects domestic demand pressure and lower CPI may require more painful measures to reach the 2.5% YoY target, (3) Poland has a very strong labour market despite the GDP slowdown – a record-high percentage of companies are planning to raise wages, and (4) we see an overhang of high energy prices, which were frozen in 2023. Still, given the MPC's current reaction function, we don't rule out the possibility of small rate cuts in the second half of the year, as external disinflationary processes intensify (large improvements in supply chains, falling commodity inflation, falling commodity prices), which should strongly reduce CPI inflation globally and in Poland. Also, the majority of the MPC is looking mainly at the headline CPI inflation rate and is targeting a soft landing (or want to facilitate a prompt GDP recovery), while paying less attention to the persistence of core inflation. Read this article on THINK TagsNational bank of poland press conference National Bank of Poland Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Declining Industrial Activity and PPI in Poland Signal Potential Policy Easing

Declining Industrial Activity and PPI in Poland Signal Potential Policy Easing

ING Economics ING Economics 21.06.2023 13:36
Poland: Further declines in industrial activity and PPI Industrial production fell by 3.2% in May for the fourth consecutive month. Producer price growth slowed to 3.1% year-on-year from 6.2% YoY a month earlier. Ongoing disinflation may allow for symbolic policy easing by the National Bank of Poland this autumn. The drop in industrial production of 3.2%YoY came close to expectations (consensus: -3.0% YoY), following a 6.0% YoY decline in April (revised). This was the fourth consecutive month of year-on-year production decline. Adjusted for seasonal factors, production fell by 1.0% month-on-month, contracting for the third consecutive month. Manufacturing output fell by 2.7% YoY. We also saw declines in mining (11.2% YoY), power generation (6.5% YoY), as well as water supply and waste management (2.4% YoY).   Among the manufacturing divisions, the deepest year-on-year declines were seen in the production of wood products (22.5%) and chemicals (20.7%). By contrast, the largest increases were seen in the repair, maintenance and installation of machinery and equipment (36.2%), the manufacture of electrical equipment – including automotive batteries – (14.5%) and the manufacture of vehicles (11.7%).   The slightly slower-than-April year-on-year decline in industrial production was due to a more favourable calendar pattern, among other factors. May's manufacturing PMI report also suggested a slight improvement in new orders and current production, but a continued decline in seasonally adjusted month-on-month production remains concerning. We expect that the year-on-year decline in production will continue over the coming months. A positive sign is the increase in the production of capital goods (9.1% YoY), suggesting continued investment growth.   Producer price growth (PPI) slowed in April to 3.1% YoY (ING: 4.7%; consensus: 4.6%) from 6.2% YoY a month earlier (revised data). Compared to April, prices declined in all sections except water supply and waste management. This is the fourth consecutive month that the PPI index declined in month-on-month terms, and prices in manufacturing have been falling since November. On a year-on-year basis, declines in processing prices (1.7%) are being supported by a significant discount in the coke and refined petroleum products manufacturing division (30.5%). Prices in mining (15.5%) and energy production (37.0%) are still markedly higher than a year ago.   Producer prices remain on a clear disinflationary path, and the Monetary Policy Council expects CPI inflation to fall further as well. Recent statements by National Bank of Poland President Adam Glapinski indicate that the drop in CPI inflation to single-digit levels in September, which we expect, could result in a rate cut this autumn. This will not yet be the start of a full easing cycle, which we expect only in the fourth quarter of 2024. We see a number of inflation risks in the medium term, highlighted by central bankers in core markets maintaining a restrictive monetary policy stance.
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Improving Inflation Outlook in Poland Points to Rate Cuts, NBP President to Adopt Dovish Stance

ING Economics ING Economics 07.07.2023 08:39
Inflation outlook in Poland should improve, leading to rate cuts As expected, rates in Poland remained unchanged (reference rate still 6.75%). In the press release, the Council focused on 2H23 and 2024 – a period of more benign inflation prospects. The bank president should sound dovish at Friday's press conference, highlighting many disinflationary pressures and preparing the ground for rate cuts this year.   Communication by the central bank This month’s Monetary Policy Council statement is more concise than after the June meeting, but it speaks of a greater conviction about the decline in inflation in the second half of 2023 and 2024. Also, the MPC expresses its view that rate hikes are working and inflation is coming down to the target. National Bank of Poland President Glapiński is likely to speak in this vein tomorrow! The most important changes in the communication are: (1) a more optimistic picture of global inflation (2) more optimistic inflation trends in Poland - e.g. the sentences mentioning the still ongoing process of passing on high costs to prices have disappeared (3) a greater belief in the effectiveness of the monetary tightening, which has already started the process of bringing inflation down to the target: in the summary passage on future inflation, the MPC states that: "The Council assesses that the strong tightening of the NBP monetary policy is leading to a decline in inflation in Poland towards the NBP inflation target". Earlier, it had said that the strong tightening of the NBP's monetary policy made earlier would lead to a lowering of inflation. The statement also noted the low economic activity in the second quarter and elevated uncertainty in the global economy and the euro area. The decline in global inflation was highlighted, including a marked decline in producer price dynamics. Although still elevated CPI and core inflation was noted, there was mention that the latter is gradually declining. Regarding the domestic situation, the Council points out that the annual CPI fell once again to 11.5% year-on-year in June from 13.0% in May, while remaining unchanged for the second consecutive month in month-on-month terms. The Council estimates that core inflation also declined in June and notes a strong fall in PPI producer inflation, which will influence the CPI to fall further in future quarters.   New GDP and inflation projections In our view, the projections show a better inflation picture in the second half of the year and 2024, but the longer-term outlook is less optimistic: (1) the NBP’s CPI projection for 2023 remained unchanged, but for 2024 was revised down by 0.5 percentage points compared to the March publication, a short-term faster decline in inflation is emerging from these numbers, but the CPI projection for 2025, which has increased slightly, is of concern (see also below) (2) in our view, with average CPI projection for 2023 at 11.9% YoY, we still think that a decrease of headline CPI below 10% in August is still possible, which could lead to an interest rate cut after the summer. In contrast, annual GDP growth is expected to be -0.2 - 1.3% YoY this year (-0.1 - 1.8% assumed in March), 1.4 - 3.3% in 2024 (previously 1.1 - 3.1%) and 2.1 - 4.4% in 2025 (vs. 2.0 - 4.3%).\   National Bank of Poland projections   Our rate forecasts – we expect interest rate cuts in September and October The MPC is strongly focused on the second half of 2023 and 2024 – a period when the inflation situation looks better compared with the March projection, so we maintain our view that rate cuts are possible after the holidays, i.e. in September and October. Tomorrow, during its press conference the NBP President should sound dovish, highlighting many of the above-mentioned developments towards lower inflation and preparing the ground for rate cuts. In the longer term, we do not see a convincing weakening of inflationary pressures. With the CPI projection for 2024 at 5.3% YoY and a planned minimum wage increase of around 20%, the real minimum wage in 2024 will increase by more than 15%! We maintain our view that going down to the NBP's 2.5% target with such real wages will be difficult and long-lasting. Our models show core inflation stabilising at 5% YoY in 2024-25. At tomorrow's press conference by NBP Governor Adam Glapiński, we expect the tone to be more dovish than a month ago. It is possible that the governor will prepare the ground for interest rate cuts after the summer.
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Polish Central Bank Maintains Rates, Praises PLN Strength, and Awaits External Factors for Further Policy Decisions

ING Economics ING Economics 12.12.2023 12:58
No change in Polish rates and stronger PLN may be a game-changer Poland's central bank keeps rates on hold and reiterates its uncertainty about the fiscal outlook and regulated prices that may impact future inflation. The MPC welcomed recent PLN appreciation as it facilitates disinflation and is more aligned with economic fundamentals. Policymakers will remain in a 'wait and see' mode until at least March 2024. The Monetary Policy Council's decision to maintain interest rates (the policy rate at 5.75%) comes as no surprise. We await tomorrow's conference by the NBP chairman,  Adam Glapiński. On the one hand, recent communication points to the end of the easing cycle, but on the other, the main central banks are about to start monetary easing (Fed, ECB, CNB). In addition, the external inflation picture is improving strongly, and the consensus is shifting towards an earlier return of CPI to target in the euro area and the US or even earlier cuts by the Fed and the European Central Bank. Minor amendment of the post-meeting press release In the official written communiqué, the Council assessed that recent appreciation is conducive to lowering inflation and is consistent with economic fundamentals. For many months, the MPC had expressed a wish that such a move in the PLN exchange rate would occur. This suggests that, in the NBP's view, further appreciation of the zloty is no longer welcomed and would not be beneficial to the Polish economy. Policymakers also noted a further fall in core inflation in November and PPI deflation, which, in the Council's view, confirms the extinction of most external supply shocks. The MPC also mentioned a gradual economic recovery. MPC communication and decisions in the coming months We wonder which way the MPC's communication will go in the coming months. There is a great deal of uncertainty about whether it will be even more hawkish or, following other banks, neutral or perhaps dovish. Factors that will shape the policy decisions in the coming months mentioned in the press release include the scale of fiscal expansion, the scale and timing of regulated price adjustments and their impact on inflation. Policymakers repeated that future decisions will depend on incoming macroeconomic data. Rates to remain unchanged in 2024, but new risk factors emerged In our view, the MPC is likely to refrain from changing the main parameters of monetary policy in 2024, awaiting important administrative decisions for the inflation profile (regulated energy prices, shield measures, VAT on food) and information on the scale of fiscal expansion in 2024. The MPC is likely to make its first serious consideration regarding the level of rates in March on the occasion of the next inflation projection, which should take into account the aforementioned factors. If our inflation scenario materialises (i.e. in the short term, inflation may surprise on the lower side, especially the core inflation rate, but in the longer term it will still remain above the target), there will be no room for NBP rate cuts at least until the end of 2024. In our view, the picture of the Polish inflation outlook may change with further PLN firming. We see risks of a stronger zloty and an earlier return of CPI to target, suggesting earlier cuts than we currently assume. At the same time, large inflows of EU funds, foreign direct investment and fiscal expansion are arguments against rate cuts as they may boost economic activity; the balance of risks points to an earlier cut than we assume.
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Cautious Tone of Polish MPC Governor Press Conference: Rates Expected to Remain Unchanged Until March 2024

InstaForex Analysis InstaForex Analysis 12.12.2023 13:49
Cautious tone of Polish MPC Governor press conference The NBP president's conference was short and cautious in its tone. The NBP may be heading in the direction of the conservative Czech National Bank. In our view, rates will remain unchanged until at least March 2024   Weak global economy, signs of recovery at home During his press conference, the NBP Governor Adam Glapinski assessed that the data received since the previous MPC meeting does not fundamentally change the assessment of the economic situation and its outlook. The external environment remains weak. The Eurozone is in stagnation and activity in Germany is declining. In Poland, economic activity remains subdued, but there are increasing signs of recovery. After declines in 1H23, 3Q23 saw GDP growth of 0.5% YoY. According to. Glapinski, the economy is beginning to improve. Global inflation is subsiding but still remains elevated. Major central banks, including the Fed and ECB, are keeping interest rates unchanged.   The NBP expects continued CPI decline, but at a slower pace President Glapinski reiterated that inflation in Poland is falling and is on a path to the NBP target, which it should reach within two years. Glapinski reiterated how much inflation has fallen (it is almost three times lower than at the February peak), adding that the core is falling as well and is around 5pp down from the peak. He noted that the decline in inflation has slowed and will also be slower in the coming quarters. In the Council's view, inflation will continue to fall due to reduced economic activity (negative output gap) and earlier monetary tightening, which cooled activity in the credit market. Also favourable for the inflation outlook is the strengthening of the PLN by about 20% against the US$ and about 10% vs. the €. Professor Glapinski was very neutral on the PLN exchange rate.   Uncertainty prompts MPC to adopt wait-and-see stance The Governor’s statements indicate that the MPC is adopting a wait-and-see stance, but definitely not a hawkish one. The MPC is waiting for decisions on electricity and gas prices, as well as VAT on food, the reinstatement of which could bump up inflation by about 0.9ppt. Therefore, the Council should take a closer look at inflation prospects on the occasion of the NBP's March projection, when the aforementioned uncertainty factors should be resolved. The Council's subsequent decisions will depend on incoming data.   Bottom line A communications revolution at the NBP took place. Yesterday's decision was made earlier than usual, i.e. at 2:29 CET  and the Governor’s conference lasted only 27 minutes. Could it be that the NBP is heading in the direction of the (conservative) Czech National Bank? During his speech, Glapiński declared willingness to cooperate with the new government and flagged cautious rate decisions in the future. In our view, a more disinflationary external environment, a stronger PLN and a more cautious NBP suggest that the risk that inflation will remain above target for a long time has moderated somewhat. Rates should remain unchanged until the end of 2024 as there is still no shortage of inflationary factors. For instance, we expect further fiscal expansion, increased wage dynamics (i.e. due to a 20% increase in the minimum wage in 2024), large inflows of EU funds and foreign direct investment. But rate cuts cannot be completely ruled out either. The space for interest rate changes could emerge in March, should global disinflation prove rapid and sustained and the zloty continue to gain. Our baseline scenario assumes that interest rates will remain unchanged, but the distribution of risks is skewed toward potentially lower inflation and the chances of earlier interest rate cuts than in 2025.

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