CEE & CCA week ahead: Polish inflation data and central bank decisions
The desk believes that upcoming Polish inflation data will lead to increased scrutiny on monetary policy as it may influence the Polish Zloty (PLN) dynamics. Per the full note , August inflation data is projected at 3.4% YoY, hinting at potential upward pressure, despite the central bank maintaining a cautious stance. This economic backdrop, coupled with the broader trends in the Central and Eastern European region, suggests shifting risk profiles for PLN and neighboring currencies. As we await the upcoming CPI release and industrial production figures, traders should prepare for heightened volatility in the PLN market.
What the desk is arguing
The desk anticipates that rising inflation pressures in Poland, with August CPI projected at 3.4% YoY, will be pivotal for PLN's direction. This expectation stems from the recent flash estimate indicating a more robust price growth due to notable increases in fuel prices, which could lead to shifts in market strategies around PLN and regional currencies.
Additionally, the industrial production metrics are set to improve, suggesting a potential for stronger economic recovery. Industrial production is forecasted to rise significantly to 8.3% YoY for August, a notable increase from 5.1% YoY in July.
Where it sits in our coverage
Our current consensus target for PLN against the euro is 1.075, with a range spanning from 1.04 to 1.12. The following firms have relevant targets: - jpmorgan: 1.10 (Mar-26) - bofa: 1.04 (Mar-26)
The desk's outlook of potential inflation-driven appreciation in PLN aligns with jpmorgan’s more optimistic target, while contrasting with bofa’s bearish forecast, suggesting different risk appetites regarding PLN's movement.
How other firms see it
Firms such as jpmorgan align with an upward bias on PLN due to prospective inflation impacts. Conversely, bofa adopts a more cautious outlook, indicating weaker expectations for growth based on external economic pressures.
Given the anticipated data releases, the performance of PLN may also be linked to EUR/PLN fluctuations and expectations around the National Bank of Poland's next policy actions. Traders should particularly note the implications of CPI and industrial production reports on regional currency dynamics.
What the calendar says
With key inflation data due on August 22, along with industrial production figures released shortly thereafter, traders should closely monitor these dates for potential market-moving implications regarding PLN.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Monitoring Polish inflation will be crucial for PLN dynamics.
- 02Cautious market reactions expected surrounding upcoming CPI data.
- 03Significant rise in industrial production anticipated, indicating economic recovery.
Market implications
Watch for potential volatility in the PLN around the CPI release and industrial production data, particularly if the readings deviate from consensus. A move above 3.4% CPI could bolster PLN, while softer prints may shift traders towards a bearish stance.
Risks to this view
A deeper inflation surprise could provoke decisive policy changes from the National Bank of Poland, reversing current market expectations. Additionally, negative external shocks affecting growth in the Eurozone could lead to weakening PLN sentiment.
Articles CEE & CCA week ahead: Polish inflation data and central bank decisions Published 11:00 Czech Republic Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland will publish inflation, current account and industrial production data next week, while monetary policy decisions are due in the Czech Republic, Armenia and Uzbekistan Adam Antoniak , David Havrlant and Dmitry Dolgin The Central Bank of Armenia is expected to keep the policy rate unchanged at 6.50% next week Poland: Industrial recovery and inflation details in focus July current account data will be released on Monday. We forecast that the deficit was only slightly narrower than in June, amounting to around €1.9bn, mainly driven by the deficit in trade in goods and the primary income deficit. Nevertheless, the deficit was probably wider than in July 2025, meaning that the 12-month rolling deficit increased to 1.1% of GDP from 1.0% of GDP in June.
The external imbalance remains very small relative to the scale of the fiscal imbalance (around 7% of GDP), suggesting that fiscal financing needs are being met primarily from domestic sources. The flash estimate of August CPI surprised to the upside, indicating price growth of 3.4% YoY, mainly driven by a strong monthly increase in fuel prices. As Statistics Poland typically does not fully capture price developments in the final days of the month when compiling the flash estimate, a slight downward revision to fuel price inflation cannot be ruled out.
However, the final reading rarely differs materially from the flash estimate, usually by no more than 0.1pp. The detailed data release on Tuesday should allow for a more accurate estimate of core inflation, which we currently expect at 3.2% YoY, up from 3.1% YoY in July. Industrial production is recovering gradually, and the August reading on Friday is expected to be quite strong (8.3% YoY, up from 5.1% YoY in July), supported by a more favourable calendar effect, with one additional working day, and a low base from August last year.
Output growth remains diversified across industrial sectors. Some industries are benefiting from the ongoing implementation of RRF-funded projects, such as other transport equipment, while others continue to struggle with competitive pressure from China, including the textiles and furniture sectors. Czech Republic: CNB set to stay on hold as producer prices gain momentum Wednesday brings the release of August producer prices, which likely gained strength in August, as the persistently elevated input costs for energy and basic materials continue to propel pricing of intermediate goods.
Meanwhile, the pass-through to end prices remains restrained due to significant international competition. The CNB is expected to keep the policy rate unchanged at Thursday's meeting, in line with the recent communication. That said, our outlook for rather punchy inflation at year-end and rocketing oil prices may complicate things in future.
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