As expected, NBP policymakers delivered their fourth consecutive 25bp rate cut in November, extending the scale of monetary easing this year to 150bp. Rate-setters reacted to lower current inflation, but may pause before a final adjustment to monetary policy. We see two more cuts in the first half of next year, with the target rate at 3.5-4% in 2026
CPI inflation moderated below both our expectations and those of the market in October, thanks to a lower core rate, making yet another 25bp rate cut in November highly probable. Our baseline scenario had assumed a pause in monetary easing, but given Poland's ongoing disinflationary trend, we're bracing for another 25bp rate cut next week
The US remains in a steady state along the coupon curve. But there’s a lot going on in the money markets pipes as repo tightness persists. As we head into the Federal Reserve meeting, the big call would be to maintain the MBS roll-off and replace it with buying of T-bills, while broadly ending quantitative tightening
The tone of NBP President Adam Glapinski’s press conference suggested openness to another interest rate cut in November. The new inflation projection, and macroeconomic data published before the November Council meeting will be important in shaping this decision. We assess the probability of another cut in November to be well above 50%
The Bank of Korea is expected to leave rates unchanged, while Bangko Sentral ng Pilipinas is seen easing. Other highlights include Tokyo inflation, India’s second-quarter GDP and China’s industrial profits
Bank Indonesia (BI) delivered a surprise second consecutive rate cut, signalling a clear focus on growth despite recent strong data. With inflation still below target and US Federal Reserve easing expected from September, we now see BI front-loading its final 25bp cut to the fourth quarter of this
At its last meeting in January, Norges Bank’s Monetary Policy Committee kept the policy rate unchanged at 4.5% but reiterated the guidance that “the policy rate will likely be reduced in March”. Since then, spot activity data remained subdued, but the labour market showed signs of resilience and business expectations turned more positive.
The euro’s outlook remains tied to developments on US tariffs and on Ukraine peace talks. EUR/USD took a hit late Friday after the Trump-Zelenskyy incident, but has rebounded since trading resumed on Sunday evening – perhaps on the news that Ukraine remains open to a mineral deal with the US and that the EU is actively trying to bring the US back to the negotiating table with Ukraine.
