On Wednesday, the Monetary Policy Council (RPP) cut interest rates by 50 basis points, bringing the reference rate down to 5.25%. While the market had widely anticipated this move, the real focus shifted to Thursday’s press conference held by the National Bank of Poland (NBP) President, Adam Glapiński. His shift in tone significantly impacted market expectations regarding the future path of interest rates and the performance of the Polish złoty.
Although Glapiński began his remarks by highlighting positive developments that justified the rate cut, his overall tone was notably hawkish. He emphasized inflationary risks, particularly uncertainty around energy prices and the pro-inflationary effects of loose fiscal policy.
Importantly, Glapiński made it clear that Wednesday’s rate adjustment did not signal the beginning of a full-blown easing cycle. Like other central banks around the world, the NBP is operating under high uncertainty and remains data-dependent in its decision-making.
Looking ahead, Glapiński expressed doubt that another rate cut would be made as early as next month, shifting the market’s attention to July (when new inflation and economic projections will be released) or to the autumn months. This had an immediate impact on financial markets—forward rate agreements (FRAs), which reflect expected future WIBOR paths, rose noticeably. Meanwhile, the EUR/PLN exchange rate dropped by around 1–1.5 groszy, settling near 4.26. Previously, markets had seen a 50 bp cut in June as a real possibility. Now, they see little chance of a cut larger than 25 bp. For the full year, markets still expect over 100 basis points of total easing—but these expectations remain highly volatile and subject to revision.
Based on Glapiński’s rhetoric, another large cut in June now seems unlikely. However, given his history of unpredictable shifts, a June rate cut cannot be entirely ruled out—especially if incoming data significantly surprises to the downside in terms of inflation. That said, July or later appears to be a more realistic timeframe for the next adjustment. We maintain the view that the NBP will reduce rates by at least 100 basis points in total this year (i.e., a further 50 bp following Wednesday’s cut).
Author: Roman Ziruk – Senior Analyst at Ebury
Source: CEO.com.pl – Glapiński Tempers Expectations for Further Cuts
