Policy response from Polish MPC likely to be small

With the coronavirus outbreak spreading across Europe and its disruption to economic activity likely to mount, we think that the Polish central bank will ease policy this year. But the tone of the MPC’s post-meeting press conference today suggests that market expectations for more than 50bp of interest rate cuts are likely to be disappointed. Fiscal policy will do more of the heavy lifting and our forecast is for one 25bp interest rate cut in the coming months.