National 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.
What the desk is arguing
The NBP's decision to hold rates steady reflects a prudent approach given the recent uptick in inflation and external geopolitical risks. Per the full note , the latest macroeconomic indicators have proven too volatile for any decisive action on rates. In July, inflation hit 2.5%, indicating that current levels remain precarious and close to the NBP's upper threshold, prompting Governor Glapiński to recalibrate his outlook.
This dovish pivot signals a retreat from earlier hopes for a potential easing cycle that Glapiński hinted at during the last policy meeting. Rising tensions in the Middle East further complicate this by introducing supply-side uncertainties that could destabilize the inflation outlook, echoing the sentiments expressed in the ing-think commentary.
Where it sits in our coverage
Our consensus target for the EUR/PLN is set at 1.075, reflecting a narrow range: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk’s outlook aligns with jpmorgan, indicating stability in the Polish currency market but diverges from bofa, forecasting a more cautious approach amidst rising inflationary pressures. This establishes our call at the higher end of the anticipated range, suggesting a preference for strategic long positions against the PLN given our expectation for stability.
How other firms see it
A cohort of firms, notably jpmorgan, sees the NBP taking a wait-and-see approach, reinforcing the current interest rate level amidst inflation concerns. In contrast, bofa maintains a more aggressive stance that anticipates potential cuts should inflation readings soften.
Key related indicators include Polish inflation data and broader eurozone economic conditions, underscoring the interconnectedness of these markets, which are relevant for cross-border trade and investments involving EUR/PLN pairs.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01The NBP is likely to keep interest rates unchanged through September.
- 02Inflation near the upper NBP target suggests caution in future rate decisions.
- 03Geopolitical tensions could exacerbate inflation concerns, limiting policy shifts.
- 04The desk's view aligns with a cautious market outlook amidst no significant upcoming events.
Market implications
Traders should monitor the EUR/PLN near the 1.075 level for potential reversals or continuation patterns, especially as the market digests inflation data from upcoming weeks.
Risks to this view
Key risks include sudden geopolitical shifts or unexpected inflation surges that could prompt the NBP to reevaluate its policy stance leading to an abrupt rate shift.
Articles National Bank of Poland preview: No cuts, but no hikes either Published 13:31 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download We expect the Polish central bank to keep policy rates unchanged in September as renewed tensions in the Middle East and higher oil prices give no room for policy easing. NBP Governor Adam Glapiński struck a dovish tone in July and was ready to consider rate cuts after the summer; subsequent developments suggest that his inflation outlook was too optimistic Rafal Benecki and Adam Antoniak We're expecting NBP Governor Adam Glapiński to tread more cautiously after tomorrow's meeting than in July National Bank of Poland (NBP) Governor Adam Glapiński adopted a surprisingly dovish stance at the press conference following the July policy meeting, but this was probably the heat of the moment rather than a lasting shift in policy sentiment. The flash estimate of June inflation came in at 2.5%, exactly in line with the NBP's target, while the cut-off date for the July macroeconomic projection fell when the memorandum of understanding between the US and Iran was still in force, supporting a relatively benign inflation outlook in the NBP's projection.
Yet the governor's suggestions of submitting a motion for a rate cut after the summer were delivered after tensions in the Middle East had intensified again, increasing uncertainty around the region's outlook. In this context, he may have gotten ahead of the Monetary Policy Council; other Council members presented a more cautious tone in the following weeks. Despite the easing bias signalled in July, our assessment has remained unchanged, as we have been less optimistic about the inflation outlook.
We continue to expect policy rates to remain unchanged in September and throughout the remainder of the year. Headline inflation increased in both July and August and is now very close to the upper bound of the NBP's target range of 2.5% +/- 1 percentage point. Moreover, CPI may break 3.5% year-on-year and even temporarily hit 4%, due to Brent crude approaching US$100/bbl once again and retail fuel prices following that trend in September.
The authorities abandoned the temporary reduction in the VAT rate on fuels, which should drive retail fuel prices and CPI up in September, if not for longer. In our view, inflation risks have increased again as a result of rising energy prices. While there is still little evidence of broader inflationary pressures or meaningful second-round effects so far, and food price deflation continues to help contain overall inflation, the risk remains that higher energy costs could lead to increases in regulated energy prices from the beginning of 2027.
We see upside risk for natural gas, as European gas prices have started to edge higher amid relatively low storage levels ahead of the heating season. To sum up, we expect the NBP to keep rates unchanged in September, with Glapiński likely to adopt a more cautious tone than in July, in light of renewed geopolitical tensions. Moreover, risks to our baseline scenario of monetary easing in mid-2027 are increasing, as higher energy prices may slow the return of inflation to target and prevent rate cuts.
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