Commerzbank’s Tatha Ghose expects Poland’s NBP to keep rates on hold after the Iran-related energy shock derailed its easing cycle. With Oil prices unlikely to normalise quickly, emergency fiscal measures and distorted price signals keep policy in a reactive, geopolitical framework. The bank argues that rate cuts are off the table unless Oil drops below $70 per barrel, a move they do not foresee yet.

Easing cycle derailed by energy shock

"Following the energy price shock stemming from the conflict in Iran, as well as remarks by MPC members, the analyst consensus unanimously forecasts unchanged rates over the medium-term, a view we share."

"The geopolitical turmoil has fundamentally altered the near-term outlook, derailing an easing cycle which continued until last month."

"And this means that most of the economic emergency measures (e.g. fuel price caps) will be maintained by the government for now – there is no question of rate cuts in this environment."

"Consequently, monetary policy is no longer operating in a purely cyclical framework but is reacting to a geopolitical shock filtered through fiscal mitigation."

"In this environment, we argue that NBP will hold rates unless the oil price were to slip below $70/bbl in the coming months, a scenario we do not forecast yet."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)