ING’s Frantisek Taborsky expects the National Bank of Poland (NBP) to keep rates at 3.75% for an extended period, with markets already pricing out most further tightening. While EUR/PLN has erased about half its conflict‑related rise, ING sees further Polish Zloty (PLN) gains if risk sentiment holds and the US‑Iran ceasefire continues, though a return to pre‑conflict levels below 4.220 will likely be slower.

Stable rates and geopolitics guide Zloty

"The National Bank of Poland is likely to leave rates unchanged at 3.75% today. This is a meeting without a new forecast and the first meeting after the March rate cut. Some MPC [Monetary Policy Committee] members indicated before the meeting that rates will likely remain unchanged for a longer period of time and some mentioned that the March cut was the last. Attention will be on the Governor's press conference today, which will likely determine the central bank's further direction."

"The market has priced out about one and a half rate hikes after the US-Iran ceasefire announcement and remains priced at less than 20bp at the one-year horizon. This is the lowest in the CEE region and rates pricing is quickly returning to normal.

If the central bank confirms its tendency to wait longer and do nothing today and, at the same time, the geopolitical situation stabilises further, we should see some pressure on the remaining rate hike pricing, although the market will probably keep some optionality here.

On the other hand, the government has aggressively entered the fuel market, which should keep inflation under control and stay roughly within the central bank's tolerance band. Our forecast is for rates to remain unchanged for an extended period."

"EUR/PLN saw its biggest one-day fall in a year yesterday, erasing roughly half of the move up from pre-conflict levels. Still, EUR/PLN and the rest of the region are mainly driven by geopolitical headlines, and today's NBP meeting will have little impact. However, assuming that the risk-on sentiment continues and the US-Iran ceasefire holds, the zloty has further potential to erase previous losses, although reaching pre-conflict levels below 4.220 will take longer."

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