Polish rate hike odds are rising, but policymakers are in no rush
At a Glance
The desk argues that Poland's central bank is likely to delay interest rate hikes despite rising inflation risk due to geopolitical tensions. Per the full note from ing-think, NBP Governor Adam Glapiński acknowledged inflation pressures but emphasized that these stem from external shocks rather than domestic demand. This cautious stance, anticipating potential hikes only in Q1 2027, aligns with expectations of subdued monetary policy in a complex global context, particularly as inflation recently breached NBP's upper tolerance limit of 3.5%.
Key Takeaways
- 01NBP's cautious approach suggests no immediate rate hikes despite inflation risks.
- 02Global energy supply issues remain a dominant factor in price stability.
- 03The timeline for potential rate hikes is now pushed to Q1 2027 as per NBP's guidance.
- 04The forecast landscape shows divergence among major banks on future PLN performance.
Full Analysis
What the desk is arguing
The desk presents a view of cautious optimism regarding Poland's interest rate trajectory, positing that while rate hike probabilities have increased, the central bank will not act hastily. Per the full note from ing-think, Glapiński underlined the transient nature of the current inflationary pressures, primarily rooted in external supply shocks rather than domestic conditions.
Supporting this perspective, the NBP's recent decision to maintain rates was influenced by a global energy supply shock, notably exacerbated by ongoing geopolitical conflicts. Polish inflation rose above the NBP's target in September, yet the central bank projects a potential return to this range by October, reflecting confidence in managing local inflation dynamics.
The alternative read would suggest a more aggressive monetary tightening could be warranted should domestic inflationary pressures escalate unexpectedly, potentially disrupting the existing policy framework.
Where it sits in our coverage
Our current consensus target for the EUR/PLN pair is set at 1.075, closely tracking expectations of NBP's monetary policy. Notable firm forecasts include: - jpmorgan: 1.10 (Mar 26) - bofa: 1.04 (Mar 26)
This perspective aligns closely with jpmorgan, which anticipates a gradual tightening, but it diverges from bofa's more conservative estimate, suggesting potential volatility in the currency pair as traders navigate these forecasts.
How other firms see it
Generally, firms like jpmorgan and socgen echo concerns about inflation while supporting a gradual approach to rate hikes. Conversely, bofa maintains a more bearish position, arguing for a constrained monetary response.
Monitoring EUR/PLN closely is pivotal due to its direct correlation with NBP's policy adjustments and broader European monetary landscape, particularly as the Eurozone wrestles with its own inflation challenges and economic recovery efforts.
Market Implications
Traders should keep an eye on the EUR/PLN as it approaches critical levels around 1.075, indicating potential resistance or support based on NBP's communications. The developments in the energy markets will likely drive sentiment in the coming weeks, with November's inflation data serving as a key marker for future direction.
From the original
Articles Polish rate hike odds are rising, but policymakers are in no rush Published 15:59 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The tone of the NBP Governor’s press conference was broadly in line with our forecast, assuming the
Related speeches
4 itemsNational Bank of Poland preview: No cuts, but no hikes either
The National Bank of Poland (NBP) is expected to maintain its interest rate policy unchanged in September, a stance that reflects concerns about inflation amidst rising geopolitical tensions and energy prices. Per the full note from ing-think, heightened anxieties in the Middle East and increasing oil prices leave little room for easing, despite previous dovish signals from NBP Governor Adam Glapiński. Inflation reached 2.5% in July and August, nearing the upper limit of the NBP's acceptable range, aligning with the governor's growing caution following his more optimistic July projections. Without any upcoming market-moving events, traders should prepare for a steady policy outlook until year-end, barring unexpected inflation fluctuations.
NBP Governor turns less dovish, remains far from rate-hike pricing
The desk posits that the National Bank of Poland (NBP) will maintain its interest rates until at least mid-2027, despite indications from Governor Adam Glapiński of a less dovish stance amid rising energy prices and inflation concerns. Per the full note [source], while Glapiński's tone has shifted toward cautious optimism, he still does not endorse imminent rate hikes, deviating from market expectations that predict approximately 75 basis points of increases over the next year. Given this backdrop, the current consensus of unchanged rates aligns with our outlook as we closely monitor inflation data and energy prices, which are key drivers of the NBP's policy considerations.