EM Central Banks: What Has Changed?

Poland

What happened: Polish central bank Governor Belka stated that a rate hike is possible, and despite market expectations for a cut, only a "very dramatic" economic slowdown would lead the National Bank of Poland to start easing. The minutes of the Jan. 11 policy meeting released this week echoed these comments.

What has changed: We no longer see any risk of a rate cut this year. The increasingly favourable cyclical story for Poland adds to our conviction that PLN should outperform the region in the medium term.

Thailand

What happened: The central bank cut rates by 25 basis points as expected, but the language of the communiqué was considerably upbeat about manufacturing, expected government stimulus, improving confidence and accommodative monetary conditions.

What has changed: The chance that the bank could stop cutting rates a wait-and-see approach in the next meetings.

Turkey

What happened: The central bank left rates unchanged as expected, will continue micromanaging domestic liquidity, but has halted regular USD selling auctions.

What has changed: Not much. The monetary policy framework implemented late last year will remain in place and the bank will continue to sell USD when necessary to prevent TRY weakness.

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