Poland: Fiscal stimulus will be PLN negative – TDS

Either today or tomorrow, broad economic stimuli are likely to be announced by the Polish government, according to economists at TD Securities. EUR/PLN trades at 4.467.

Key quotes

“We see a high chance of coordinated action by the government and the NBP. The government has already promised a stimulus package.” 

“The NBP may do its part by loosening monetary conditions. There is a high likelihood that the Bank will be easing the Base Rate by 50bps to 1.00%.”

“The EUR/PLN reaction is unpredictable. However, the market is already priced for some emergency easing, even though not a full 50bps cut. Therefore, some slight weakness is possible.” 

“The fiscal package that should be announced more or less simultaneously may move the zloty a lot more than any NBP action. We suspect the initial impact of fiscal stimulus will be PLN negative.”