Rates in Poland unchanged, but 2027 inflation projected higher
The desk posits that the National Bank of Poland's (NBP) decision to maintain interest rates at 3.75% reflects a cautious approach to current economic conditions, as highlighted by their recent inflation forecast adjustments. Per the full note source, despite low inflation readings allowing for a softer tone, rising oil prices could pressure future monetary policy decisions and thereby impact the zloty's performance. Projections for an increase in inflation in 2027 suggest potential medium-term pressures that traders should monitor closely, particularly as the zloty might face renewed selling pressure from a dovish stance. With no major calendar events affecting Poland's monetary policy anticipated in the near term, traders should remain vigilant of global market movements and oil price trends.
What the desk is arguing
The desk believes that the NBP's neutral tone and unchanged rate indicate a wait-and-see approach amidst a complex inflation landscape. With oil prices on the rise and previous economic measures expiring, the risk to the zloty could intensify as markets adjust their inflation expectations.
In July, Poland's NBP maintained its reference rate at 3.75%, aligning with market expectations. Most notably, their inflation projections have risen, suggesting that the 2.5% target may come under pressure, especially if global oil prices continue to increase.
Where it sits in our coverage
Currently, our consensus target for the EUR/PLN stands at 1.075, with a range between 1.04 and 1.12. For instance, jpmorgan sets a target of 1.10, while bofa is forecasting a more bearish 1.04.
This view aligns with broader market sentiment that acknowledges rising inflation pressures but is tempered by the NBP's cautious tone. The desk's projection leans toward the upper end of this consensus range, indicating a potential bullish stance on the zloty, depending on external economic conditions.
How other firms see it
Firms like jpmorgan and hsbc are aligned in their expectations of a stable to potentially strengthening zloty, citing similar inflation concerns. Conversely, bofa presents a bearish outlook, advocating for a weaker zloty given the inflationary pressures.
Traders should also observe related currency pairs, particularly EUR/PLN and USD/PLN, as global economic indicators may influence domestic monetary policy and thereby affect zloty dynamics. The interplay between regional inflation data and the European Central Bank's (ECB) movements further complicates this outlook.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01The NBP's decision to maintain rates reflects cautious economic conditions.
- 02Higher inflation projections for 2027 suggest potential pressures on monetary policy.
- 03The zloty may face additional selling pressure due to rising oil prices.
- 04No significant calendar events expected that could impact the NBP's policy stance.
Market implications
Traders should watch for shifts in oil prices as a key determinant of future NBP policy decisions impacting the zloty. Additionally, potential movements around the 1.075 target level against the euro could signal broader market sentiment.
Risks to this view
Should global oil prices stabilize or fall significantly, or if there are unexpected shifts in local economic data, the NBP might adopt a more hawkish stance, invalidating the current bearish bias on the zloty.
Articles Rates in Poland unchanged, but 2027 inflation projected higher 17:37 Poland Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The Monetary Policy Council left rates unchanged in July. The National Bank of Poland statement has a neutral tone, while the somewhat higher 2027 inflation projection than our forecast may reflect differing assumptions about oil prices. Policy rates are set to stay at the current level this year.
The dovish tone may put additional pressure on the zloty Rafal Benecki , Leszek Kasek and Adam Antoniak The National Bank of Poland kept the reference rate at 3.75%, but in its new projections raised its inflation forecasts and lowered its GDP estimates In line with analysts’ expectations, including ours, the Monetary Policy Council (MPC) left the National Bank of Poland (NBP) interest rates unchanged, with the reference rate still at 3.75%; the most recent 25bp cut took place in March. Rationale behind the decision Low inflation readings for May and June allow the MPC to further soften its tone, but the renewed jump in oil prices argues for caution. The MPC opted for a wait-and-see approach.
The decline in inflation to the 2.5% target in June mainly reflects lower oil prices and a surprisingly sharp fall in food prices. At the same time, core inflation remains around 3%, while the full expiry of the government measures, which had kept fuel prices lower (cuts in excise duty and VAT rates), clearly pushed up petrol station prices at the start of July. The post-meeting statement has a neutral tone and is very short.
Apart from updates reflecting the latest data and the main conclusions from the latest inflation projection, it contains no important new information. The statement notes the clear decline in oil prices, weaker economic conditions in Poland’s immediate external environment and the recent fall in inflation. At the same time, it observes that despite the recent decline in inflation, global inflation is higher than at the beginning of the year and uncertainty remains elevated, particularly in connection with the conflict in the Middle East.
New projection shows higher inflation than in March In line with our expectations, compared with March this year, the July NBP macroeconomic projection revised the inflation path for 2026-27 upwards and the economic growth path for 2026-27 downwards. The March, low inflation NBP projection assumed oil market conditions from before the war, which is why the July projection is higher than the previous one. The NBP sees inflation in 2027 higher than our forecasts.
This is probably related to the cut-off date for the projection, 17 June, the day the preliminary US-Iran agreement was signed. A week before that date, oil was above US$90/bbl, and two weeks before it was above US$100/bbl. Therefore, oil price assumptions underlying our and the central bank forecasts may differ.
The projection points to a possible undershoot of the inflation target in 2028, with inflation averaging 2.4% year-on-year, but the March projection showed a similar picture, at an average of 2.3% YoY. According to the NBP, annual average CPI inflation will reach 2.9% in 2026, compared with 2.3% in March, then 2.8% in 2027, previously 2.4%, and 2.4% in 2028, previously 2.3%. GDP growth is expected to be 3.7% in 2026, versus 3.9% in the March projection, 2.8% in 2027, previously 2.9%, and 3.0% in 2028, previously 2.9%.
However, the March projection painted an optimistic picture of inflation as it did not take into account the US-Iran war and its impact on oil prices. In the current projection, the CPI inflation forecast for 2027 appears too high, which may reflect a greater pass-through of higher energy prices into other prices or a more conservative oil price assumption. Comparison of the July and March NBP projections Source: National Bank of Poland, ING reserach. "> Source: National Bank of Poland, ING reserach.
Our view In our view, rates will remain unchanged until the end of the year. We think the next move will be a cut, most likely in 2027, when inflation may fall below the 2.5% target. For now, renewed escalation of the conflict and the jump in oil prices call for a cautious softening of the MPC’s tone.
In addition, the Council needs more time to observe inflation over the coming months. The tone of tomorrow’s press conference by governor Adam Glapiński will be important for the short-term outlook for the zloty. In recent weeks, the zloty has underperformed regional currencies.
The Czech central bank still does not rule out rate hikes, and the curve prices in a 50bp rise in rates. The dovish rhetoric of the National Bank of Hungary has had only a limited negative impact on the forint because of strong euro area convergence play. Poland, however, remains far from adopting the euro.
Therefore, any further softening of the NBP’s tone could weaken the zloty even more, giving exporters some breathing space. Projection NBP rates National Bank of Poland rate decision Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Rafal Benecki Chief Economist, Poland Rafal Benecki is a Chief Economist at ING in Poland, joining in 2005. Prior to this, he was the head of the Economic Analysis Bureau at Millennium Bank in Warsaw. He has an MSc in Financial… Leszek Kasek Senior Economist Leszek Kąsek is a Senior Economist in the economic research team at ING Bank Śląski in Warsaw, responsible for sustainability, energy transition, and green finance in Poland.
He… Adam Antoniak Senior Economist Adam has about 20 years of experience in macroeconomic research. He has worked for leading financial institutions in Poland (Bank Pekao, Bank BPH), and members of international financial groups… In this article Rationale behind the decision New projection shows higher inflation than in March Our view
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