Polish economic data supports our call for rate hikes in early 2027
At a Glance
The desk views the recent Polish economic data as reinforcing the expectation of interest rate hikes in early 2027, as indicated by the more hawkish tone from the Monetary Policy Council (MPC). According to the analysis provided by ing-think, despite a slowdown in GDP growth to 3.5% year-on-year and core inflation falling below 3%, the MPC's projections for high inflation in 2027 support a base case of a 50 basis point increase. This commentary suggests a more aggressive monetary policy response in the face of economic challenges, particularly as net exports have turned negative and household consumption remains under pressure due to rising prices and elevated household savings rates. The desk anticipates that these dynamics could shift investor sentiment towards Polish assets in the medium term, particularly given the consensus views from peer firms on interest rates and currency forecasts.
Key Takeaways
- 01Poland's GDP growth slowed to 3.5% YoY in 3Q26, reflecting weakened consumption and exports.
- 02Core inflation has dropped below 3%, but the MPC signals plans for rate hikes in early 2027.
- 03Household consumption pressures arise from rising costs and geopolitical uncertainties.
- 04The monetary policy outlook appears hawkish, with projections for higher inflation influencing rate decisions.
Full Analysis
What the desk is arguing
The desk is interpreting the Polish economic slowdown as a harbinger for upcoming rate hikes, aligning with the hawkish sentiment from the MPC. Per the full note from ing-think, the predicted inflation spikes in 2027 are central to this outlook, despite the current core inflation falling below 3% YoY.
Notably, GDP growth decelerated from 4.1% to 3.5% YoY in 3Q26, while private consumption growth is under duress. As household incomes are squeezed by rising prices and geopolitical uncertainty, the MPC’s shift is seen as a proactive rather than reactive measure in an effort to curb possible inflationary pressures following a period of stagnation.
Where it sits in our coverage
Our coverage reflects a consensus target for the Polish zloty (PLN) against the euro (EUR/PLN) at 1.075, with estimates varying significantly among firms, including: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This analysis suggests a moderate divergence, with our target sitting slightly above the median of its range. Notably, jpmorgan aligns with a bullish stance, while bofa appears more cautious and skeptical about the rate hike timeline.
How other firms see it
While some firms, led by jpmorgan, back the outlook for rate hikes based on inflation concerns, contrary views from bofa suggest a more subdued future economic climate that could hinder aggressive monetary policy.
With the potential for adjustments in the EUR/PLN trajectory signaling broader sentiment shifts, watch for developments in related forecasts from the NBP and inflation reports as critical markers for future rate decisions.
Market Implications
Traders should watch the 1.075 level for potential support as the outlook for rate hikes becomes more certain. Focus on upcoming employment data and CPI releases that could impact MPC decisions.
From the original
Articles Polish economic data supports our call for rate hikes in early 2027 Published 10:45 Poland Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland’s economy slowed in the third quarter, while core inflation fell below 3% YoY. T
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4 itemsPolish MPC remains patient and keeps policy rates on hold in October
Per the full note from ing-think, the National Bank of Poland kept its reference rate at 3.75% in October, and the desk argues this on-hold stance can persist for several months despite headline inflation rising. The MPC attributed the September uptick primarily to fuel prices while core inflation likely edged lower, and it introduced 'regulatory decisions concerning energy prices' as a new risk to the outlook. Analysts Rafal Benecki and Adam Antoniak frame the statement as broadly neutral with a mildly dovish tint, suggesting any tightening cycle would not arrive until 1Q27 — and would be less aggressive than markets currently price. No high-impact events are scheduled for Poland over the next 30 days, meaning the next real catalyst is Governor Glapinski's press conference and the evolution of regulated energy prices. Our internal coverage bundle contains no tracked currency pair for this commentary, so we have no consensus target or per-firm spread to anchor against.
CEE & CCA week ahead: Inflation data from Poland and Czech GDP
The desk anticipates a notable uptick in inflation in Poland, pushing CPI above 4% YoY, which could activate market expectations for interest rate hikes. This expectation aligns with the impending release of CPI figures on Wednesday, where the cessation of the temporary VAT cut on fuels and rising crude oil prices are significant contributors to inflation. Per the full note [source], this shift in the inflation landscape positions Poland's economy well above the National Bank's target range, signifying potential policy adjustments in the near term. Additionally, Czech GDP data set to confirm the second-quarter figures may shed light on consumer behavior, particularly in relation to household consumption amidst supply chain concerns. Both developments will be closely monitored by traders for their implications on currency valuations.