The National Bank of Poland (NBP) is expected to maintain its policy rate at 3.75% for the third consecutive meeting, according to Brown Brothers Harriman’s (BBH) Elias Haddad [1]. The NBP has indicated that its easing cycle, which resulted in a total of 200 basis points of rate cuts over the past year, is now concluded [1]. Despite inflation in Poland running above the NBP’s Q2 projections—headline inflation at 3.1% year-over-year in May versus a forecast of 2.4%, and core inflation at 2.6%—analysts do not anticipate imminent rate hikes [1].
Recent economic data presents a mixed picture. Headline Consumer Price Index (CPI) unexpectedly declined by 0.1 percentage points to 3.1% year-over-year in May, compared to a consensus estimate of 3.6%, suggesting limited impact from recent energy shocks [1]. On the growth front, real Gross Domestic Product (GDP) increased by 0.5% quarter-over-quarter in Q1, below the consensus expectation of 0.7%, and slowed to an annual pace of 3.4% (NBP forecast: 4.0%) compared to 4.1% in Q4 [1].
Given these developments, BBH expects the USD/PLN exchange rate to remain confined within a narrow 3.6000–3.7000 range, reflecting the market’s view that the NBP is likely to stay on hold for the foreseeable future [1]. No significant market volatility or strong directional moves are anticipated in the near term as a result of the central bank’s stance and the current economic backdrop [1].
CONCLUSION
The National Bank of Poland’s decision to keep rates unchanged, despite above-target inflation and softer growth, has left the Polish Zloty trading in a tight range. Market participants are not expecting significant policy shifts or currency moves in the near term.