CEE FX: Diverging guidance caps upside – ING

ING’s Frantisek Taborsky reports that the Czech National Bank and National Bank of Poland kept rates unchanged but signalled different risk balances. He sees limited scope for further tightening in Czech Republic and a prolonged hold in Poland with conditional tightening risks. Without a clear hawkish catalyst, he expects CEE currencies to stay broadly range‑bound near current levels.

CNB dovish, NBP more cautious

"The Czech National Bank and the National Bank of Poland both left policy rates unchanged (3.50% and 3.75%, respectively), in line with expectations, but signalled diverging risks through their communication. In the Czech Republic, Governor Ales Michl struck a relatively dovish tone, emphasising a wait-and-see approach and arguing that policy is already sufficiently tight, with the Board willing to look through near-term supply-driven inflation pressures."

"By contrast, in Poland, President Adam Glapiński highlighted rising upside risks, pointing to the phase-out of energy subsidies and returning food VAT as potential drivers of renewed inflation pressure in the second half of the year."

"Across the region, recent FX stabilisation has been supported by improved global sentiment, but without a clear hawkish catalyst, further appreciation looks constrained, leaving currencies broadly range-bound near current levels."

"From a market perspective, the contrast suggests limited scope for further tightening in the Czech Republic despite still-elevated rate expectations and waiting longer before a possible hike decision, while in Poland the discussion has shifted away from easing toward a prolonged hold, with tightening risks conditional on inflation persistence."

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