PiS backs down in EU row, Polish hawks getting louder

This week’s U-turn by Poland’s government over a controversial judicial reform suggests that policymakers are adopting a less divisive stance in the run-up to next year’s elections. While this is unlikely to have a significant macroeconomic impact, it should help to support local financial markets. Meanwhile, the minutes of Poland’s November MPC meeting (released yesterday) suggested that the hawks on the committee are becoming more vocal, reinforcing our view that a tightening cycle will begin by mid-2019.