The National Bank of Poland surprised to the upside yet again with its 100bp rate hike – the main rate now stands at 4.5%. Economists at ING think the market's underestimating future rate hike trajectories. The move is positive for the zloty.

NBP raises rates by 100bp and there’s more to come

“Strong move by Poland's Monetary Policy Committee takes its main rate to 4.5%. We see it reaching 6.5% this year and 7.5% in 2023. That's more than is being priced in by the markets. The move is positive for PLN and is likely to translate into a flattening of the yield curve.”

“The scale of monetary tightening in Poland will be larger than priced in by the market. It will put further downward pressure on EUR/PLN, pushing it towards 4.58-59 in the coming days. The higher pace of monetary tightening also paves the way for stronger zloty appreciation for the remainder of this quarter.” 

“EUR/PLN may reach 4.50 within the next couple of months. It is even more likely given signals that the EUR/USD decline is losing momentum.”