As the Polish central bank (NBP) prepares to announce its decision, all signs point to a continuation of the current key interest rate at 5.75%. This comes as no surprise to market analysts, including Commerzbank’s FX Analyst Antje Praefcke.

NBP’s Stance on Interest Rates Impacting PLN

The Monetary Policy Council (MPC) is in agreement that interest rates will remain steady until at least the end of the year. Despite previous indications from NBP’s head, Adam Glapinski, suggesting otherwise, recent discussions have hinted at a possible reevaluation in 2025. However, for now, the focus remains on combating inflation, which currently stands at 4.30%.

With core inflation at 3.8%, above the target range of 2.5% +/-1%, the NBP’s decision to maintain rates is seen as a necessary measure to control price pressures. Market expectations align with NBP’s stance, indicating a neutral outcome for the Polish Zloty (PLN).

While political motivations may play a role in future monetary policy decisions, the current market perception views NBP’s restrictive approach as a positive factor for the zloty in the near term.

Analysis:

The NBP’s decision to hold the key interest rate steady reflects a cautious approach to managing inflationary pressures. By maintaining rates, the central bank aims to stabilize prices and support the Polish economy. This stance may impact currency markets and investor sentiment in the short term, with potential implications for individuals and businesses navigating financial markets.

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