Commerzbank’s Tatha Ghose reports that the National Bank of Poland kept rates at 3.75% and a neutral stance, but Governor Adam Glapinski’s press conference was markedly dovish. He floated a possible September rate cut and downplayed inflation and FX risks, leading Commerzbank to expect Polish Zloty (PLN) underperformance versus Czech Koruna (CZK) as markets price in easing in coming quarters.

NBP dovish tilt weakens zloty case

"Poland’s National Bank (NBP) delivered a cautious July sitting, on paper, with unchanged 3.75% rate, a neutral stance, and updated macroeconomic projections which appear stagflationary. As examples, the new Inflation Report raised the 2026 CPI mid-point by 0.60pp to 2.85% and 2027 by 0.35pp to 2.75%, while trimming GDP growth for those years by 0.20pp and 0.15pp respectively."

"But, the press conference tore up this story: NBP Governor Adam Glapinski described the council as “cautiously dovish” and himself as “decidedly dovish”, openly floating a 25bp cut motion at the September meeting (if no fresh shock were to arrive). He conceded that fuel tax normalization will push inflation higher in coming months, but insisted CPI will stay inside the 2.5%±1pp band and portrayed recent developments – slower wage growth, softer commodity prices, a benign growth outlook – as inflation-supportive in the dovish sense."

"There was no genuine concern about second-round effects from the Iran shock. Glapinski even downplayed recent zloty weakness, simply repeating that the CB could intervene in FX if the move were to become “too sharp”."

"In essence, Glapinski confirmed our own view that the next move would be a rate cut, not hike, something markets could begin to price-in for Q4. The reason why Glapinski’s dovishness came as somewhat of a surprise is that the Iran situation had worsened in the past couple of days, and NBP’s forecast revisions matched up with that direction."

"This means that the main supportive factor for PLN – the idea that Iran might force NBP into a hawkish stance – has evaporated. With CNB still enjoying a more credible hawkish bias, the zloty is set to underperform the Czech koruna over the coming quarter."

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