Yesterday’s press conference by the head of Poland’s central bank (NBP) brought us one step closer to the end of the current cycle… of interest rate adjustments. A negative trade signal came from China, while Germany delivered a mildly positive one. Friday’s trading session begins under an increasingly uncertain environment.
Hawkish Cut Supports the Polish Zloty
Yesterday’s press conference by NBP President Adam Glapiński did not deliver any immediate strong market moves. Once again, Professor Glapiński reiterated that Poland is not in a cycle of interest rate cuts, despite five reductions this year totaling 150 basis points, bringing the reference rate down to 4.25%. Glapiński exercised great caution when discussing the future path of policy decisions, using the central banker’s favorite phrase: “decisions will be made meeting by meeting, in line with incoming data.”
However, it was clear from his remarks that the “non-cycle” of interest rate adjustments is nearing its end. He thanked the Monetary Policy Council and the NBP’s departments for their efforts in bringing inflation close to target levels. This could be interpreted as an announcement that the fight against high inflation is nearly won and that interest rates are close to a so-called neutral level.
This interpretation was further supported by comments published today by Bloomberg from another MPC member, Ludwik Kotecki. He noted that inflation will likely continue to surprise positively but believes rate cuts should end early next year, settling at a target range of 3.75%–4.00%. Taken together, this amounts to what’s known as a “hawkish cut” – rates were cut again in November, but the end of the easing moves is near. In the medium term, this could ultimately support the złoty.
Two Different Trade Signals
Is China beginning to feel the impact of its trade war with the United States? Supporters of this theory will find evidence in the October trade balance figures: imports rose just 1% year-on-year, significantly below both prior data and forecasts, marking the weakest result since May. Exports fared even worse — down by 1.1% annually, the first decline since May 2024. In the prior month, exports grew by 8.3%, and expectations were for a 3% increase.
Is this merely a blip, or a sign of deeper economic trouble in China? It’s too early to draw firm conclusions, but it adds another piece to a growing puzzle of global uncertainty. The Shanghai Composite fell slightly (-0.25%), but the Hong Kong market, more exposed to foreign investment flows, dropped 1%. In currency markets, the release halted a two-day rally in the yuan, though the decline was limited, with USD/CNY still below 7.13.
A very different trade picture came from Germany, where September data greatly exceeded forecasts. Exports rose 1.4% month-on-month, and imports surged 3.1%. Still, Germany shouldn’t celebrate just yet. Recent quarters show a pattern of alternating strong and weak months, which makes it hard to call this a recovery or a sign of stability.
Rising Uncertainty, But No Immediate Impact on PLN
Investor sentiment remains tense. Wall Street has yet to recover from the recent correction, attributed to profit-taking or cooling sentiment toward tech stocks – whose weight in indices continues to climb. Now, retail companies are adding pressure, as private data increasingly reflect a cooling labor market, signaling weaker U.S. consumer demand.
Asian equities largely declined, while Europe opened mildly positive, only to see gains fade as the session progressed. In Warsaw, the WIG20 is hovering around yesterday’s close – though Thursday’s session was strong, helped largely by banking sector gains.
On the FX front, Friday starts quietly. EUR/USD remains above $1.15, EUR/PLN is trading below 4.25, and USD/PLN is hovering near 3.68.
Source: ceo.com.pl
