Polish Zloty: Dovish stance leaves PLN vulnerable against Euro – ING

ING’s Frantisek Taborsky notes that the National Bank of Poland maintained a dovish stance, signalling no need to adjust rates potentially until mid-next year despite rising inflation. This has allowed EUR/PLN to rebound and leaves scope for further upside, with delayed rate hikes and a dovish tone expected to keep Poland’s already steep yield curve under pressure.

NBP stance opens door to more weakness

"The National Bank of Poland delivered no surprises yesterday, while the governor remained dovish relative to peers, market pricing and the global backdrop."

"Although he acknowledged the recent rise in inflation, he sees no need to adjust rates, potentially until mid-next year, when weaker GDP growth should begin to ease price pressures."

"EUR/PLN rebounded to 4.320-4.330, in line with yesterday's range, as dovish repricing narrowed the rate differential."

"We see scope for a further move towards 4.330-4.340 today. Rates are edging only modestly, with energy prices still driving the market."

"Delayed rate hikes remain the baseline, and a dovish tone should steepen the curve further, even though Poland already has the steepest curve in emerging markets."

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