The Polish zloty underperformed its peers on Wednesday after the comments of two members of the NBP’s Monetary Policy Council (MPC). Andrzej Bratkowski, who had opposed the decision to hike rates back in May, said that interest rates should fall to 4% (i.e., by 75 bps) by the end of this year. Meanwhile, Jerzy Hausner, who is on the other hand perceived as one of the most hawkish MPC members, said he expected the new inflation report to indicate interest rate cuts. Recent comments therefore suggest that the cut might be announced as early as at the next meeting (11/7). Moreover, there might be a consensus that the easing should be finished in a short term horizon. Therefore, we continue to bet on two rate cuts within the next three months.
Miroslav Singer, the Czech National Bank governor, said today in early morning that there is a possibility to intervene against the koruna which is a logical option for the export-oriented economy. However, he added that the intervention is rather a backup option and refused to specify the exchange rate level that would trigger it (although he admitted that he did not have a dramatically good feeling about the current koruna’s rate). Singer also reiterated that Czech households seem to be overly conservative; clearly, the CNB decided to put even greater emphasis on communication as a monetary policy tool.