Commerzbank’s Tatha Ghose notes Polish forwards have scaled back expected easing to under 25 bps over 3–6 months, even as dovish inflation data and MPC rhetoric point to a March cut. He sees a 25 bps move as a done deal and expects a sub‑3.50% terminal rate, implying the Zloty may underperform CE3 peers for some months.

NBP path debated beyond March move

"The forwards market has recently reduced the magnitude of rate cuts that it is pricing-in for Poland over the next 3-6 months: it used to be more than 25bp at the beginning of February but, since the February central bank (NBP) rate meeting, this has narrowed to less than 25bp."

"In a series of interviews, MPC members Ludwik Kotecki, Gabriela Maslowska, Przemyslaw Litwiniuk and Henryk Wnorowski have all explicitly or implicitly pointed to a high probability of a 25bp reduction at the upcoming meeting, citing an increasingly optimistic inflation outlook."

"It is worth mentioning that the policy path beyond March is becoming more actively debated, though, with less references being heard now that the terminal interest rate level should be as low as 3.25%, and some members even holding that only one 25bp rate cut is justified (implying 3.75% terminal rate) – while Governor Glapinski had previously hinted at a terminal rate of 3.50%, other members are floating these cautious scenarios, which probably explains the movement in market pricing."

"We maintain our view that the committee leans dovish, and that the terminal rate could settle below 3.50%. This could keep the zloty on a path of underperformance relative to its CE3 peers for some months."

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