PLN: NBP Governor surprises the markets – ING

National Bank of Poland Governor Adam Glapiński once again managed to surprise the markets big time. Pricing of the first cut has moved to mid-year with 100bp overall next year, which may come under pressure today again, ING’s FX analyst Frantisek Taborsky notes.

Pricing of the first cut moves to mid-year

“The main conclusion from the press conference is that, according to the Monetary Policy Council, extending the energy price freeze next year would result in an unfreezing in the fourth quarter of 2025, introducing a later inflation risk. This postpones the return of inflation to the central bank's target by six months compared to the baseline scenario in the NBP's November projection, delaying the start of its easing cycle.”

“Our economists were expecting the first rate cut in May and 100bp in 2025, significantly less than market pricing ahead of the press conference – but even this scenario now seems optimistic. At the same time, the global story is moving in a dovish direction, which will make it difficult for the NBP to resist rate cuts for very long amid easing from other central banks.”

“For now, however, the market reaction to this hawkish shift is more important – and although we expected some tactical gains in the zloty yesterday, this NBP message may make them more permanent. Pricing of the first cut has moved to mid-year with 100bp overall next year, which may come under pressure today again. The jump in the rate differential suggests levels at 4.260 EUR/PLN, a key level this year. We are likely to see it tested today.”