Biznes Fakty
The złoty reacted to Adam Glapiński's „hawkish tones”. Economists' analysis
Following the announcement from NBP President Adam Glapiński on Thursday, expressing skepticism about potential further interest rate reductions in June, the Polish zloty gained strength. „President Adam Glapiński adopted a hawkish stance today, highlighting the risks associated with rising inflation,” noted economists from Pekao.
During his address on Thursday, NBP President Adam Glapiński stated that it seems unlikely the Monetary Policy Council would decrease interest rates in June. He indicated that the prevailing outlook among most MPC members signifies that autumn will be crucial for rates.
Glapiński further commented that altering interest rates does not imply the commencement of a new cycle and that certainty is lacking. He also evaluated that the remarks from MPC members indicate that should the Council opt for additional rate reductions, whether in July or the autumn, a majority would back this decision.
In his view, all signs point to inflation having already reached its peak, although it remains high. The struggle for a sustained decrease in CPI is ongoing, with uncertainties, particularly regarding energy prices. He noted that core inflation continues to be stubborn and excessively high, attributing the main inflationary pressures to an accommodating fiscal policy.
The NBP President also revealed that the forthcoming MPC meeting will address the topic of mandatory reserves. The width of the interest rate corridor is also expected to be discussed in June.
„Hawk” Glapiński’s conference
Economists characterized Thursday’s remarks from the NBP president as hawkish.
„President Adam Glapiński adopted a hawkish tone today: the focus was more pronounced than a month prior on the potential upward risks for inflation; yesterday’s interest rate cut was (for now) a one-time adjustment, with further cuts anticipated in July or autumn. Our forecast (-100 bps in total this year) remains unchanged,” stated Pekao economists on the X platform.
„Market expectations prior to the meeting (-200 bps this year) seem unreasonable – this is not a reversal of the situation from 2021-22. The MPC is demonstrating once more that it can halt whenever it chooses, irrespective of market pressures,” they added.
„President Glapiński’s statements indicate that the Monetary Policy Council has just implemented a 'hawkish cut.’ The rate cut scenario presented in April appeared more dovish. Currently, June might see a reduction of about 25 bps (though likely not), with probable cuts only in July or autumn,” mBank economists commented on the X platform.
According to economists at ING Bank Śląski, the next interest rate cut is likely to occur in July.
„President Glapiński’s press conference aligned with our monetary expectations. A pause in June followed by a transition to a cycle of rate cuts of 25 basis points. The next reduction will probably happen in July, following the inflation forecast, with subsequent cuts expected in the autumn. The market had anticipated and priced in too much too quickly,” wrote ING Bank Śląski economists on the X platform.
PKO BP economists maintained their outlook that two additional cuts of 25 basis points will occur this year – one in the summer (July) and another in the autumn (November).
The zloty gains strength after the NBP conference
Following the NBP president’s remarks, the EUR/PLN exchange rate tumbled, dropping by approximately 1.5 groszy within minutes. The USD/PLN exchange rate hovered around the reference level just before Glapiński’s address, and after the conference commenced, it decreased by about 1 groszy.
The Monetary Policy Council, during its meeting on 6-7 May 2025, reduced all NBP interest rates by 50 basis points, including the reference rate to 5.25%. This decision aligned with market expectations.
