Yesterday, the calm in the region was shattered by headlines from an interview with the Governor of the National Bank of Poland (NBP) after a non-monetary decision meeting. The NBP is currently on a summer break, with the next monetary meeting scheduled for the end of September, according to ING’s FX strategist Frantisek Taborsky.

End of PLN’s 10-Day Rally

During the interview, Governor Adam Glapiński addressed his recent comments about potential rate cuts, acknowledging the possibility of economic and inflation surprises next year. However, his base case scenario still leans towards a rate cut in 2026 due to upside risks to inflation, despite some of his colleagues’ differing views.

According to our economists, the first rate cut is expected in the second quarter of 2025, based on the inflation outlook for the upcoming months. If data surprises on the downside, a rate cut in the first quarter of 2025 is also possible. This could lead to lower market rate levels followed by new pay flow later on.

While the short-term rates outlook is mixed, the FX market is clearer. The Polish Zloty (PLN) weakened in response to the Governor’s comments, with further weakening expected today. This marks the end of PLN’s rally over the last 10 days, shifting our bias to bearish with EUR/PLN 4.290 as the initial target following yesterday’s rate differential decline.

Analysis:

The Governor’s comments have created uncertainty in the market, particularly regarding the timing of potential rate cuts. This could impact your finances, especially if you have investments tied to interest rates or foreign exchange markets. It’s important to stay informed about these developments and consider adjusting your investment strategy accordingly to mitigate any potential risks and capitalize on opportunities that may arise.

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