Poland's FinMin can see GDP growing by 3.30% this year

EUR/PLN is attempting to breach below the 4.255 handle after POLAND's FnMin DOMANSKI expressed that a strong PLN isn't helping exporters and some export orientated companies see it as a problem when asked about monetary policy. Still, Domanksi didn't want to expressed his desired level for interest rates as "it's very important" for the central bank to maintain their independence, reiterating that the Finance Ministry is "not interfering in currencies."

Domaski also pointed out that a weaker demand for loans and a sluggish recovery in Euro area countries coupled with weak industrial production from Germany poses a problem for Polish companies.

Domaski also expressed that he sees the economy accelerating this year and next, which should help reduce the fiscal gap in their excessive deficit procedure without needing to seek significant savings in budget. The FinMin sees GDP growing by 3.10% this year but he stated that the economy can even growth at a larger pace of 3.30%, expecting to see the main positive impact from the unlocked EU recovery funds in 2025 (via Bbg).

Strong growth my be difficult to achieve as the NBP has kept their interest rate steady at 5.75% for a 9th straight meeting as policymakers expect inflation to accelerate on the back of rising energy prices and wages. Inflation rebounded last month, adding to arguments that monetary easing will have to wait until early next year. Still, softer core inflation and economic activity may set the stage for cutting rates in 4Q. The central bank highlighted that the NBP will continue to take all necessary actions in order to ensure macroeconomic and financial stability, including above all to bring inflation down sustainably to the NBP inflation target in the medium term. In the coming quarters, the consumer price growth is likely to increase and will be running above the NBP inflation target, which will be driven by the raised energy prices.

Still, Gov GLAPINSKI hardened on his stance on inflation, stating that policymakers are unlikely to cut rates until 2026 as they anticipate that inflation will resurge again owing to the government's decision to partially lift energy price caps, which rules out the chance of a rate cut this year. Glapinsk stated that "we can forget about cutting interest rates when inflation rate goes up significantly.

Looking back at EUR/PLN, negative studies suggest a downside break exposing 4.2371 (14 Feb 20 low) then 4.2030 (30 Apr 18 low).

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