Poland’s Kotecki projects an extended rate pause, reinforcing the zloty and dampening bond market volatility amid lingering inflation risks.
Kotecki's signal of a prolonged rate pause supports the zloty by maintaining Poland's interest rate advantage over the eurozone, where the ECB is expected to cut further. The carry trade dynamic could push EUR/PLN lower.
If the NBP holds rates while the ECB cuts, the interest rate differential widens in favor of PLN, likely pushing EUR/PLN lower toward 4.20.
Support at 4.25, with a break below opening path toward 4.15; resistance at 4.32.
Kotecki signaled a hold through at least mid-2027, but if inflation falls faster, cuts could come earlier.
Polish central bank board member Ludwik Kotecki stated that the Monetary Policy Council is poised for a prolonged period of stable interest rates, citing persistent core inflation above 4%. The comments reinforce Governor Glapiński’s hawkish guidance and dampen near-term easing bets. The zloty found support on the outlook, as stable Polish rates contrast with expected ECB cuts, widening the yield advantage.
He indicated that the Monetary Policy Council sees a prolonged period of stable rates, meaning no cuts or hikes are likely in the near term due to stubborn inflation.
Core inflation remains above the central bank's comfort zone, and policymakers want to see a sustained decline before easing.
Stable rates, while other central banks may cut, can attract carry trade inflows, supporting the zloty.