Monetary policy council (MPC) cut rates by 150 bps this afternoon, in line with prevailing expectations. The 28-day intervention rate was cut to 11.50%. The MPC has maintained neutral bias for future rate movements, however, it did so after all previous cuts this year. The zloty firmed slightly from 4.0692 to 4.0650 after the announcement. The MPC could not ignore the slowdown of the real sector, negligible inflationary pressures and the decline in inflation to 4.0% y/y, after the government presented quite conservative budget draft this month. Despite the fact that rates were slashed already by 750 bps this year, we still consider the current level of intervention rate too high. Nevertheless, as the next MPC meeting takes place already in three weeks time, we do not expect the next cut to come sooner than in January.
The next meeting is scheduled for December 19-20.
(Konrad Soszynski, Kredyt Bank, Warsaw)
(Jakub Dvorak, CSOB, Prague)