Polish Zloty: Hawkish pricing seen at risk of correction against Euro – ING

ING’s Frantisek Taborsky expects the Polish central bank to keep rates at 3.75% as Middle East tensions and higher Oil prices limit easing scope. Markets now price around 80bp of tightening, similar to the Czech Republic, but the NBP is less hawkish. ING sees scope for repricing and a partial dovish correction that could lift EUR/PLN back above 4.330 soon.

NBP stance may trigger EUR/PLN rebound

"We expect the Polish central bank to keep rates unchanged at 3.75% today, as renewed tensions in the Middle East and higher oil prices leave little scope for easing. National Bank of Poland Governor Adam Glapiński sounded dovish in July and was open to post-summer rate cuts."

"However, subsequent developments suggest his inflation outlook was too optimistic, with inflation likely to rebound towards the upper end of the tolerance band later this year."

"The Polish market shifted hawkish in August alongside global markets and now prices around 80bp of tightening, similar to the Czech Republic. However, the Czech National Bank remains notably more hawkish than the NBP."

"Unless the NBP surprises today or tomorrow, some repricing is likely. Oil and gas prices will continue to support hawkish bets, but a partial dovish correction could lift EUR/PLN back above 4.330 soon."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)