Today all eyes will be on the MPC rate decision and, more importantly, the monthly press conference and statement. The wording on “the need to tighten monetary policy shortly” disappeared from the commentary in April, which (under the assumption that under the new communiqué formula the Council plans to start exploiting key phrases in the way the ECB does) suggests that, at the time, the Council did not intend to continue hiking rates in May. The latest monthly data (on salary inflation, employment, production and retail sales in April) are evidence that the economy is entering 2Q at full speed, although they do little to nothing to support the need for an immediate rise in borrowing costs.
Nevertheless we believe that despite the marginally softer-than-expected signals from the real economy in May the upside risks to inflation have remained more or less in place, which is why even though rates will almost certainly stay unchanged, the MPC should stick to its (hypothetical) restrictive bias. This points to a moderately hawkish, April-like policy statement, which could be moderately negative for the short end of the yield curve and mildly positive for the zloty.