Commerzbank warns the Polish Zloty faces further downside as the NBP delays tightening until Q1, ignoring long-term inflation risks in favor of temporary administrative price measures.
NBP Governor Glapinski signalled no rate hike until at least Q1, ruling out December, while new NBP projections show inflation above target into 2027 (above 3.5%y/y in H1 2027 even with fuel tax relief extended). Commerzbank's Ghose warns policy risks staying too loose and notes the zloty is already tanking, which should weigh on PLN further.
The central bank's hawkish talk was not matched by action: a December hike was effectively ruled out and the earliest tightening is Q1, while its own projections show inflation staying above target into 2027. Commerzbank sees this as policy too loose for too long, which is negative for the zloty.
The Governor said the MPC discussed fearing it might have to hike, but ruled out December as a traditional 'holiday' meeting, making Q1 the earliest plausible timing for tightening.
With the NBP ruling out a December hike and inflation projected above target into 2027, Commerzbank expects continued zloty weakness, which pushes EUR/PLN higher. The article explicitly notes the zloty is 'already tanking', supporting an upward move in the pair over the coming days to weeks.
A central bank that keeps rates on hold while its own projections show inflation above target into 2027 is seen as too loose, and Commerzbank argues this 'augurs badly' for the zloty, meaning EUR/PLN would tend to rise.
The National Bank of Poland (NBP) has signaled no interest rate hikes until at least Q1, despite new projections showing inflation remaining above target through 2027. Commerzbank analyst Tatha Ghose warns that the central bank's reliance on temporary administrative fuel-price interventions to justify a policy hold leaves monetary policy too loose, creating a bearish outlook for the Polish Zloty.
The central bank's hawkish rhetoric was not matched by action; by ruling out a December hike and keeping rates on hold despite long-term inflation projections, the NBP is perceived as maintaining a policy stance that is too loose for the current economic environment.
Commerzbank argues that maintaining the status quo while inflation remains elevated augurs badly for the currency, suggesting that the EUR/PLN pair is likely to trend higher as the zloty weakens.