On Wednesday, the eye-catcher was the release of Polish industrial production for June. The figure fell short of expectations (1.2% Y/Y vs. 4.3% Y/Y) which consequently triggered short-term sell-off of the zloty. However, the EUR/PLN cross rate eventually closed barely changed.
Nevertheless, in a response to the figure, Anna Zielinska-Glebocka, the member of the Monetary Policy Council (MPC), said today in early morning that the MPC should consider cuts in interest rates if the slowdown of the economy was deep.
In a response to the figure, the spread between FRA 3x6 and three month Wibor fell to -23 basis points and thus indicates interest rate cut in 3 months horizon.
Such expectations are, in our view, premature (in 9 months horizon, the spread is even -82 bps, i.e. indicates three 25 bps cuts in the official rate). In other words, we stick to our view that the official interest rate might remain unchanged throughout the rest of this year. The next MPC meeting is scheduled for early September.
Meanwhile in Hungary, there was no major news from either the IMF or domestic politics. The currency broke through the key 285/€ level, which may open the way for further strengthening. The IMF elegation arrived this week to meet officials, but this could be just a formal introduction, but the IMF may prepare its analysis over the next weeks, which could be followed by real negotiations.