Energy shock keeps a 1Q27 rate hike on the table in Poland
The desk anticipates that the ongoing energy shock will compel the National Bank of Poland (NBP) to implement rate hikes in the first quarter of 2027. Per the full note from ing-think, NBP Governor Adam Glapiński has highlighted rising inflation pressures, spurred by elevated energy commodity prices amid external geopolitical tensions, which introduces a risk of inflation exceeding the central bank's target range. Despite current core inflation remaining stable, the NBP is maintaining a vigilant stance on inflation dynamics, indicating potential policy action in response to external shocks.
What the desk is arguing
The desk argues that the energy crisis is likely to lead to a rate hike in Poland as inflation pressures continue to mount. According to NBP communications, inflation recently returned to the central bank's target range of 2.5% plus or minus 1 percentage point, yet the persistent high energy prices present a significant risk to these projections.
Evidence suggests that the energy price surge—specifically, European gas prices currently standing 2.5 times higher than earlier this year—poses a viable threat to broader inflation trends, even if core inflation rates have not yet reacted significantly. Governor Glapiński emphasized that while no immediate second-round inflation effects have emerged, the bank remains prepared to adjust monetary policy if the cost pressures lead to inflationary spillovers.
Where it sits in our coverage
Our institutional consensus has set the target for the Polish zloty at 1.075, with a range stretching from 1.04 to 1.12, reflecting a cautious outlook on the currency's performance against the euro. Specific forecasts from notable firms include: - jpmorgan: 1.10 by Mar26 - bofa: 1.04 by Mar26
This desk’s projection aligns toward the upper end of the spectrum, suggesting a slightly more hawkish stance than that indicated by bofa.
How other firms see it
Consensus among firms such as jpmorgan indicates an expectation of a less aggressive approach in the near term, while bofa takes a contrasting view, advocating for a more conservative path. The currency pair EUR/PLN stands as a notable indicator of market sentiment toward Polish monetary policy.
What the calendar says
No significant calendar events are scheduled in the upcoming weeks that would influence this narrative directly.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's NBP is poised to consider rate hikes due to rising energy prices and inflation risks.
- 02Current CPI inflation has stabilized within target range, buoyed by price caps, but external pressures linger.
- 03Governor Glapiński underscored the non-reaction of core inflation to current energy costs, suggesting a cautionary stance.
- 04The timeline for potential rate adjustments aligns with ongoing global energy volatility.
Market implications
Watch for any indications from the NBP that may suggest a shift towards tightening monetary policy, particularly as energy prices remain high. A significant move in the EUR/PLN could signal market reactions to these inflationary pressures.
Risks to this view
A reversal of this outlook could occur if energy prices retreat significantly, reducing immediate inflation concerns. Additionally, a substantial decline in consumer demand or corporate earnings could limit the ability of companies to pass on increased costs, thus alleviating inflationary pressures.
Articles Energy shock keeps a 1Q27 rate hike on the table in Poland Published 16:28 Poland Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Poland's central bank is increasingly alert to inflation risks from the prolonged energy shock, despite limited evidence of second-round effects so far. Governor Adam Glapiński signalled that the Monetary Policy Council is ready to act if needed. We maintain our call for 50bp of rate hikes in 1Q27 Rafal Benecki and Adam Antoniak In the press conference, Governor Glapiński seemed to be concerned about high energy prices and potential second-round effects on inflation Energy shock drives inflation up At November's press conference, National Bank of Poland Governor Adam Glapiński noted that CPI inflation declined in October and returned to within the central bank's target range of 2.5% +/- 1ppt.
Core inflation probably declined as well. At the same time, the war in the Middle East continues to keep energy commodity prices elevated, adding to global price pressures. European gas prices are currently 2.5 times higher than at the beginning of the year.
A large part of the increase in inflation in Poland reflects more expensive commodities, although regulatory measures in the fuel market, including price caps and lower excise duties and VAT, are limiting the impact. External supply shock dominates, with no second-round effects so far Elevated inflation is primarily the result of an external supply shock that is beyond the reach of domestic monetary policy. Adam Glapiński said there were no clear signs that higher fuel prices were spilling over into prices elsewhere in the economy.
Nor has there been a strong increase in core inflation, with CPI excluding food and energy only slightly higher than at the beginning of the year. In the view of MPC Governor Glapiński, companies have limited scope to pass higher costs on to consumers due to weak demand and competitive pressures. Wage growth also remains moderate, while business surveys suggest that wage pressures are not building.
A range of inflation risks Despite the still relatively favourable picture of the economy and limited evidence of secondary inflationary pressures so far, the NBP Governor highlighted a number of risks to the inflation outlook. In his view, a prolonged energy shock could prompt companies to pass higher energy, freight and insurance costs on to a broader range of goods and services. Producer prices (PPI) are also rising rapidly.
High gas prices feed through into fertiliser prices with about a one-year lag, which in turn pushes up food prices. Under current legislation, the fiscal programme reducing fuel prices is due to expire at the beginning of next year. A balanced assessment of the risks, but readiness to act In recent months, the NBP governor has presented a balanced assessment of inflation developments.
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