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The National Bank of Poland (NBP) surprised for a second month in a row by leaving benchmark interest rates unchanged at 2.0% on November 5. Despite much confusion sown by individual rate setters since the October surprise of a 50 basis point cut, the majority of analysts and the markets had expected rates to drop another 25bp, with most insisting the NBP is again behind the curve. 

Rate setters on Poland's Monetary Policy Council (MPC) launched a long-expected easing cycle in October with the large cut to the key reference rate. It also cut 100bp from the top of its rate corridor, saying it wants to "concentrate cuts in time".

Since then, the usually rambunctious MPC has returned to form, sending very mixed signals over the last month as rate setters try to get to grips with the direction of growth and inflation. Data from August nosedived across the region, and recession fears are once again stalking the Eurozone. 

That has had analysts calling for Polish rate setters to offer the economy enhanced stimulus to fight the effects of the Eurozone slowdown and Russian sanctions, and hence halt deflation. The global environment - and the European Central Bank's drift towards quantitative easing in particular - has only supported that view.

However, recent indicators suggest summer holidays exaggerated the dangers. With Polish macroeconomic data and confidence surveys improving over the last month, consensus for the November meeting had settled on a 25bp cut. Yet the MPC appears to have taken an even more bullish approach to the upturn.

Hawkish Governor Marke Belka has called for any easing to be short and sharp. That, on top of the large divisions in opinion amongst MPC members, suggests the NBP is mostly finished with cuts for the meantime. Those expectations have led some to talk about unconventional policies, dubbed "Polski QE" or "luzowanie ilosciowe".

However, analysts are wary of the NBP's reticence. William Jackson at Capital Economics points out that with deflation now stalking the economy, he had fully expected another cut. "Even though the MPC no longer seems to be in the mood for easing policy," he writes in a note, "low inflation means monetary conditions will remain loose for a prolonged period."

More clarity is expected after the NBP comments on the November decision. With the mixed signals coming out of the NBP recently, the markets will be hoping to get some understanding over whether or not the decision marks the end of easing or just a pause.