The second week of September will bring several key signals for Polish assets. Markets expect Poland’s Monetary Policy Council, RPP, to keep interest rates unchanged and the European Central Bank to raise rates. Both decisions are largely reflected in prices, so investors will focus on the language used by central bankers. The strongest market reaction may ultimately come from Friday’s US inflation report.
Markets will listen closely to the NBP president
The immediate domestic focus is Wednesday’s RPP decision and Thursday’s press conference by National Bank of Poland President Adam Glapiński.
His previous comments created significant volatility after he suggested that a post-summer rate cut could become possible. The remark hit the zloty particularly hard because it ran against both expectations for Poland and the more hawkish rate outlook in major economies.
EUR/PLN subsequently moved above 4.30 for a sustained period for the first time in almost two years, and that level is now acting as an important market reference point.
The zloty market may therefore pay even more attention to Glapiński’s press conference than to the RPP decision itself. If the NBP president maintains a strongly dovish tone, the Polish currency could again come under pressure.
Market pricing has moved in the opposite direction, with investors now assigning a meaningful probability to several Polish rate increases over the coming months. If the NBP instead emphasises inflation risks, while major foreign central banks sound less hawkish, the zloty could gain several groszy against major currencies.
ECB expected to raise rates by 25 basis points
Thursday’s European Central Bank meeting is another major event. The consensus expects the ECB to raise its reference rate by 25 basis points to 2.5%.
Final euro-area GDP data provide additional support for tightening. The economy grew 0.6% quarter on quarter and 1.2% year on year in the second quarter, stronger than earlier estimates.
That gives policymakers an argument that a rate increase is not simply a reaction to commodity-price inflation, but also reflects an economy that has proved more resilient than expected.
However, the increase itself has been priced in for some time. Investor attention is therefore likely to focus on President Christine Lagarde’s press conference and any clues about the next steps in monetary policy.
US CPI could decide the Fed debate
The week ends with US inflation data. The CPI measure is not the Federal Reserve’s preferred inflation gauge, but a reading around the forecast 3.4% year on year would still be uncomfortable for policymakers.
Markets have had difficulty interpreting recent US labour-market data. A major surprise in job creation, together with substantial revisions to previous months, generated less market reaction than might normally be expected and added to uncertainty over the reliability and meaning of individual releases.
As a result, investors remain divided over the Fed’s next decision. Market pricing is close to an even split between a hike and a pause. If neither scenario becomes dominant before the meeting, the Fed announcement itself could produce a sharp increase in volatility.
Key currency levels
On Monday afternoon, EUR/USD was trading around 1.162, close to the middle of its recent local range. EUR/PLN was edging higher toward 4.31, while USD/PLN remained just below 3.71.
USD/JPY also deserves attention. The pair recently fell below 155 for the first time since February. Continued dollar weakness against the yen could spill over into broader currency markets.
For Polish investors, the week is therefore unusually dense with potential triggers: the RPP decision, communication from the NBP, the ECB’s expected hike and the final major US inflation reading before the Federal Reserve meeting.
Source: ManagerPlus market analysis.
