The Polish central bank hiked rates by less than expected this month and signalled a possible end to monetary tightening. In the view of economists at Commerzbank, the zloty will remain under pressure as long as NBP maintains this stance.

NBP to sound sanguine that no further monetary tightening will be required

“NBP governor Adam Glapinski remarked that the zloty’s recent depreciation was not significant enough to delay inflation peaking by Q3. He forecasts inflation to peak at c.16% if the government’s inflation shield measures were extended.” 

“The key question is: will this be a technical peak in the year-on-year rate of change as base-effects kick in or a bona fide peaking followed by moderation because of dissipation of inflation drivers and tighter monetary policy? Today’s core inflation reading may give some clues in this respect.”

“But crucially, the zloty will likely extend its underperformance as long as NBP continues to sound sanguine that no further monetary tightening will be required.”