Polish Zloty: Limited downside risk – Commerzbank

Commerzbank’s Tatha Ghose writes that Polish core inflation has firmed but remains manageable, driven mainly by external energy shocks rather than domestic policy errors. He argues this supports a data‑dependent, wait‑and‑see stance from National Bank of Poland (NBP), with rate hikes unlikely unless inflation exceeds 3.5% for a prolonged period, and sees limited additional downside for the zloty despite recent underperformance.

External shock keeps NBP on hold

"Poland’s latest CPI data confirm that inflation pressures have firmed, but the underlying trend still looks manageable."

"So far, then, core inflation has only slightly accelerated from its February trough, and while this is a reversal of earlier “mission accomplished” narratives, it is not evidence of a new, broad-based inflation shock."

"If geopolitical tensions ease and energy markets normalise, the recent uptick should prove temporary and both headline and core inflation can reasonably be expected to drift back toward NBP’s target."

"For monetary policy, this argues for patience rather than an immediate shift to a hiking stance."

"Unless inflation were to move progressively above 3.5% over an extended period, rate hikes are unlikely – unchanged rates through to year-end remains the most plausible baseline."

"The zloty has been the top underperformer among CE3 over the past year – while these data will not support the currency, they are no reason for additional pressure either."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)