ZLOTY’S RELATIVE UNDERPERFORMANCE LIKELY TO EXTEND FURTHER – COMMERZBANK

Economists at Commerzbank analyze PLN outlook as markets await the first rate cut by Poland’s National Bank (NBP) in September.

Shaping up for first rate cut in Poland

Inflation is sufficiently close to the 10% YoY mark, while the real economy is proving much weaker than markets had anticipated. As a result, it is quite likely that NBP will kick-start its rate cutting cycle in September with a 25 bps reduction. 

Such a prospect was increasingly priced-in over the past month, leading to the Polish Zloty underperforming the Hungarian Forint. This relative underperformance of Zloty is likely to extend further.