Polish inflation relief turns NBP hold into a patient pause
The NBP kept its reference rate at 3.75%, and the June statement reads more as a patient pause than a hawkish hold.
The Council is not ready to reopen the easing cycle, as higher global fuel prices, geopolitical uncertainty and fiscal risks all argue against it. But softer domestic inflation, slower growth and easing wage pressure equally reduce the case for a renewed tightening debate. The zloty remains rate-supported, without a clear catalyst for further appreciation.
On inflation, May CPI eased to 3.1% YoY from 3.2% in April, driven by lower food price growth, reducing the immediate risk of inflation breaching the NBP's tolerance band.
The Council nonetheless stopped well short of guiding towards cuts. The external inflation backdrop remains uncomfortable: fuel prices have surged on Middle East supply constraints, and agricultural commodity prices are also rising. Domestic disinflation is real, but the external shock has not disappeared.
Growth complicates the picture further. Polish GDP slowed to 3.5% YoY in Q1 from 4.1% in Q4, reflecting weaker fixed investment and moderating consumption. Wage growth has eased and enterprise-sector employment is declining, even as the broader labour market holds up. Higher energy prices and tighter financial conditions are already weighing on parts of the economy, enough to make a hike difficult to justify unless inflation risks become more persistent.
For PLN, the picture is mixed. A steady 3.75% rate still provides support through positive real-rate dynamics and limits vulnerability to a disorderly selloff.
But the latest inflation and wage data reduce the premium markets need to price in. The Council remains data-dependent rather than dovish, with fiscal policy, fuel-price regulation, global commodity prices and wage growth all still relevant for the inflation outlook.
The zloty does not need hikes to stay resilient, but it likely needs renewed inflation pressure, a stronger signal from Governor Glapiński, or a broader improvement in CEE risk appetite to strengthen materially.
We still do not chase zloty strength after this decision. EURPLN remains more likely to drift modestly higher, with our forecast shifting from around 4.25 over one and three months to 4.28 over six and twelve months, reflecting limited near-term upside for PLN absent a fresh policy catalyst.