Today’s comments from NBP President Adam Glapiński were quite dovish. Despite the NBP revising its inflation projection upward and oil prices rising this week, the bar for monetary policy easing appears to be lower than the market had expected. A return to interest-rate cuts later this year cannot be ruled out, perhaps as soon as after the summer, provided that the external environment does not get in the way — in particular, further escalation in the Middle East. In response, the zloty weakened visibly: against the euro, it reached its lowest level since late 2024.
No surprise in the decision, but a surprise in the tone
The Monetary Policy Council kept interest rates unchanged on 8 July — the reference rate remained at 3.75%, the deposit rate at 3.25% and the lombard rate at 4.25%. This was in line with the near-unanimous expectations of analysts. The tone of Thursday’s press conference by President Glapiński, however, came as a surprise. The market had expected a more cautious, even hawkish message — after all, on the same day the NBP published a projection assuming higher inflation, while oil prices were rising in response to the escalation of the conflict in the Middle East. Instead, the NBP president did not rule out a return to rate cuts later this year, while making it conditional on the stabilisation of the external environment.
NBP projection: inflation higher, GDP slightly lower
The July projection by the NBP’s Economic Analysis and Research Department — based on data available up to 17 June and assuming unchanged interest rates — raised the CPI inflation range for 2026 to 2.4-3.3%, from 1.6-2.9% in the March projection. At the same time, the GDP growth path for 2026 was slightly lowered — to 3.0-4.4%, from 3.1-4.7% in March. The NBP indicated that although domestic CPI inflation fell in June to 2.5% year on year, from 3.1% in May, and returned to the target, the external environment — especially the conflict in the Middle East — remains the main source of uncertainty for the future price path.
Oil and the Middle East: a risk that could disrupt the plans
Tensions in the Strait of Hormuz escalated again in early July — after Iranian forces attacked commercial vessels, the United States responded with a series of strikes on targets in Iran. The oil market reacted with a jump in prices: Brent, which at the beginning of July was still trading around pre-war levels, broke back above USD 80 per barrel within a few days. This factor — rather than domestic data — has been the main test in recent weeks for the credibility of the MPC’s dovish rhetoric. President Glapiński admitted, however, that a hard stance against rate cuts is not a foregone conclusion, provided the geopolitical situation does not deteriorate.
NBP rate path: from 5.75% to 3.75% in 14 months
The current level of interest rates is the result of an easing cycle that began in May 2025 with an immediate 50-basis-point cut and continued at almost every subsequent meeting — a total of six cuts in 2025 amounting to 175 basis points, followed by one more 25-basis-point cut in March 2026. Since then, the MPC has kept rates unchanged for five consecutive meetings. The next meeting, on 25 August, will be non-decision-making because of the summer break — the first real opportunity for a possible move will therefore come only in September.
Zloty under pressure from dovish remarks
Against this backdrop, it is no surprise that the zloty came under pressure. After President Glapiński’s remarks, the currency reached its weakest level against the euro since late 2024, with EUR/PLN at around 4.32. A dovish tone from the central bank, while it simultaneously raises its inflation projection, sends investors a signal that the real premium on Polish assets may shrink faster than assumed as recently as the beginning of the week — and that directly undermines the attractiveness of the zloty compared with regional currencies.
The combination of a higher inflation projection and the NBP president’s dovish tone is unusual — the market was prepared for caution, but instead received a signal of openness to further cuts. It was this contrast, rather than the decision to leave rates unchanged itself, that surprised investors most and weakened the zloty.
- The scenario of rate cuts after the summer is back on the table — companies should recalculate the cost of floating-rate financing in their fourth-quarter budgets.
- The weakening of the zloty to levels not seen since late 2024 increases the cost of imports and components settled in euros or dollars — an important factor for companies with import-intensive supply chains.
- The higher inflation projection for 2026, at 2.4-3.3% versus 1.6-2.9%, means cost pressure may persist longer than assumed in the spring.
- The situation in the Strait of Hormuz remains a key risk factor — further escalation could quickly test the MPC’s dovish stance, regardless of domestic data.
- The next real opportunity for a rate change will come only in September — the August MPC meeting will be purely review-based.
Own analysis based on NBP/MPC announcements and market data.
