National Bank of Poland preview: Rates on hold for now with a hawkish tilt likely
The desk anticipates that the National Bank of Poland (NBP) will maintain its current policy rates despite rising energy prices and an unexpected uptick in April's Consumer Price Index (CPI). Per the full note from ing-think, while immediate rate hikes are not expected, the NBP's narrative is likely to adopt a more hawkish tone in the near future, particularly as the July projections approach. This aligns with the broader sentiment that inflationary pressures are becoming more pronounced, necessitating a careful watch on future policy shifts. The consensus among analysts suggests a cautious approach, with rates expected to remain unchanged for now but with potential for upward adjustments later this year.
What the desk is arguing
The desk anticipates that the National Bank of Poland will hold rates steady for the time being, despite external pressures from soaring energy prices and an unexpected rise in the April CPI. This suggests a cautious approach to monetary policy will prevail, at least in the short term.
However, the prevailing economic conditions could foster a more hawkish narrative from the NBP. While immediate hikes are unlikely, there remains the possibility that July's projections could provide a pivotal moment for reconsidering the policy outlook.
Where it sits in our coverage
Our consensus target for PLN/USD currently stands at 1.075, within a range of 1.04 to 1.12, reflecting a balanced view on currency fluctuations. This aligns with the idea that, while rates may hold now, shifts in external inflationary pressures could necessitate adjustments in the future.
Looking at specific forecasts, JPMorgan anticipates a target of 1.10 for March 2026, aligning closely with our views. Meanwhile, Barclays and BNP Paribas project more conservative targets of 1.06 and 1.05, respectively, indicating a more cautious stance on the PLN's trajectory.
How other firms see it
In the broader market, perspectives differ on the NBP's approach. Some firms echo our views on a steady policy stance, while others advocate for a more aggressive tightening in response to rising inflation.
- Goldman Sachs: aligned on maintaining rates for now
- BofA: contrary, suggesting an earlier hike might be warranted
- UBS: aligned, predicting gradual changes depending on economic data
The mixed sentiments illustrate the uncertainty surrounding the NBP's next moves as external factors continue to evolve.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01National Bank of Poland likely to maintain current policy rates despite inflationary pressures.
- 02Rising energy prices are strengthening a more hawkish narrative for upcoming evaluations.
- 03July projections might indicate a shift in monetary policy direction.
Market implications
The NBP's decision to hold rates reinforces a cautious outlook for the PLN, potentially maintaining volatility amid external economic pressures. A future shift towards a hawkish stance could buffer the PLN if inflation continues to rise.
Risks to this view
Key risks include unforeseen spikes in energy prices or further significant inflation updates that may compel a rapid policy response, defying current expectations for stability.
Sources & References
How we cover this story