ING’s Frantisek Taborsky highlights slightly higher final Polish inflation and unchanged core forecasts, with most Monetary Policy Committee members signalling that December is the earliest for rate-hike discussions. He argues delayed National Bank of Poland tightening, a firmer Dollar and record gas prices leave the Zloty vulnerable, and reiterates expectations for EUR/PLN to return to the 4.380–4.400 range.

Dovish NBP stance weighs on Zloty

“Final Polish inflation was revised slightly higher to 4.1% from the 4.0% September flash estimate. Our core inflation forecast is unchanged at 3.1%, down from 3.3%, with today’s release expected to confirm the figure.”

“Since the October National Bank of Poland meeting, nearly all Monetary Policy Committee members have spoken, offering mixed signals. Most have sounded somewhat more hawkish than Governor Adam Glapinski, but the majority see December – not November – as the earliest for discussing a rate hike.”

“All agree that the new forecast and pace of disinflation next year will be decisive. Detailed interviews have also focused on government measures to cap household fuel prices. Approved only through year-end, these measures reduce headline inflation by 0.6-0.7pp.”

“We can assume these measures can be extended into Q1 if needed, with the Ministry of Finance indicating that a decision will come in December. This should allow the NBP to delay tightening further. Our economists still expect hikes to begin in Q1 next year, with 50bp of tightening in total.”

“Yesterday’s stronger-than-expected US core CPI halted gains in CEE currencies and pushed sentiment back into risk-off mode. Our bearish CEE FX view remains unchanged: a firmer US dollar and record-high gas prices will make it difficult for regional currencies to sustain gains.”

“The PLN looks particularly vulnerable given the NBP’s dovish stance relative to market pricing. We therefore continue to expect EUR/PLN to return to the 4.380-4.400 range.”