National Bank of Poland preview: In a sweet spot for now
At a Glance
The National Bank of Poland (NBP) is expected to maintain its current interest rate at 3.75% during the upcoming July meeting, as inflation has recently stabilized at the target level of 2.5%. Per the full note from ing-think, the central bank is likely in a "wait-and-see" mode, with no rate cuts anticipated in the immediate future despite fluctuations in global oil prices. Market expectations have shifted significantly, moving from forecasts of multiple rate hikes to the possibility of cuts later in the year, but our desk maintains that the rates will remain untouched through at least year-end 2026.
Key Takeaways
- 01NBP likely to maintain interest rate at 3.75% in July.
- 02Inflation has stabilized back at the target of 2.5%.
- 03Discussion on potential rate cuts may emerge later in the year.
Full Analysis
What the desk is arguing
The desk anticipates that the NBP will keep interest rates steady at 3.75% during the meeting on July 9 due to recent inflation stabilization. According to ing-think, inflation has returned to the NBP's target of 2.5%, with any potential future rate cuts remaining unlikely in the near term.
Recent strong inflation readings were attributed to temporary energy shocks, but the desk believes that with June's CPI aligning with the target, the Monetary Policy Council will focus more on a cautious approach rather than aggressive changes. Thus, the consensus is to hold rates unchanged through 2026, with potential discussions around cuts cropping up later in the year.
Where it sits in our coverage
Our internal assessment projects a consensus target range for the Polish Zloty around 1.075 with boundaries of 1.04 to 1.12 against a basket of currencies. Notably, jpmorgan holds a target of 1.10 for a March 2026 maturity, while bofa is below consensus at 1.04 for the same tenor.
This perspective aligns with our peers’ expectations for stability in NBP rates, and the desk's call aligns centrally within the outlined spread, suggesting limited volatility in Poland's monetary stance for now.
How other firms see it
Various firms generally expect similar outcomes, with majority expecting a stable rate environment. Aligned firms include jpmorgan, supporting our view, while bofa diverges with a more bearish target.
For traders, the EUR/PLN dynamics could offer insight into how regional economic factors might influence the Zloty's performance. Additionally, keep an eye on Poland's GDP reports, which could serve as bellwethers for broader economic health and central bank decision-making.
Market Implications
Traders should watch for any signals in the upcoming press conference from NBP Governor Adam Glapiński, as a dovish tone could prompt shifts in market positioning. Moreover, monitoring the EUR/PLN trajectory might provide additional clues on the Polish currency's responsiveness to regional monetary signals.
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Articles National Bank of Poland preview: In a sweet spot for now 09:51 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download With inflation back at the 2.5% target in June, we think the Polish central bank is likely to maintain its wait-and-see stan
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