Zloty Weakens as Policy Shift Favors Czech Koruna

Key Moments

NBP Policy Outlook and Market Pricing

Tatha Ghose at Commerzbank expects Poland’s National Bank (NBP) to leave its key interest rate unchanged at 3.75%, noting that this outcome is already fully embedded in forwards. According to the analyst, the market focus has shifted away from the July decision itself and toward how the Monetary Policy Council (MPC) will frame its guidance on future moves.

“Poland’s National Bank (NBP) will announce its July monetary policy decision today: the analyst consensus is unanimous that the base rate will stay unchanged at 3.75%. This outcome is already fully reflected in forwards. The more interesting question is what language the MPC will use around future moves, now that recent inflation data have comprehensively stripped away the rate-hike narrative.”

Inflation Dynamics and Disinflationary Pressures

Ghose highlights that recent inflation data have been pivotal in reversing expectations for future rate hikes. The latest consumer price index figures indicate a sharp cooling in price pressures, with energy and food once again exerting a disinflationary influence.

“Headline CPI slowed to 2.5% year-over-year in June, weaker than consensus; more importantly, the month-on-month price change turned negative and, after seasonal-adjustment and smoothing, worked out to near-zero. In other words, the recent oil shock did not generate a lasting impulse; disinflationary forces in food and energy have re-asserted themselves.”

From Hike Speculation to Easing Discussion

The shift in inflation momentum has directly affected money market pricing. Positions that had anticipated tightening in the medium term have been cut back, and attention is increasingly turning to when easing might begin.

“As we commented earlier, FRA contracts had been pricing in possible hikes later in 2026 only a month ago – these bets have now been pared. Given the drop in energy prices, in our view, rate cut bets could return for discussion by Q4, with some commentators already floating March 2027 as a realistic timing for easing to start.”

Implications for PLN Carry and Relative Performance

Commerzbank argues that the removal of a prospective hiking cycle undercuts one of the last remaining supports for the Polish zloty. While real rates are seen staying positive, the expectation that they will not be lifted further – and might eventually be reduced – is viewed as detrimental to the currency’s carry appeal.

“This shift removes one of the few remaining supportive factors for the zloty exchange rate. A positive real interest rate cushion will persist, but it is no longer expected to widen via hikes – and if markets were to lean towards renewed easing, the carry premium will shrink further.”

At the same time, Commerzbank contrasts the NBP stance with that of the Czech National Bank (CNB), which is described as maintaining a stronger inclination toward tighter policy.

“At the same time, the Czech National Bank (CNB) retains a more credible hawkish bias. We therefore expect today’s “on hold” decision and neutral, data-dependent guidance to reinforce the prospect of PLN underperforming the Czech koruna in coming months.”

Policy and Market Snapshot