Polish Zloty Faces Reduced Rate Hike Expectations After Softer Inflation Data — Commerzbank

Softer-than-expected June inflation has led markets to scale back expectations for future National Bank of Poland (NBP) rate hikes, a development that Commerzbank strategist Tatha Ghose says could reduce support for the Polish Zloty (PLN).

Poland's headline consumer price inflation slowed to 2.5% year-on-year in June, down from 3.1% in May and below the consensus forecast of 2.7%. According to Ghose, the weaker reading was driven mainly by easing food and energy prices and may indicate a moderation in inflation pressures.

Following the inflation release, Forward Rate Agreement (FRA) pricing moved lower as markets adjusted expectations for the policy outlook. Ghose said the probability of additional NBP rate hikes had fallen to "almost zero," compared with expectations seen only weeks earlier. Market attention has increasingly turned toward the possibility of future rate cuts, with some analysts pointing to March 2027 as one possible timeline for policy easing, while Commerzbank said discussions about potential rate cuts could re-emerge as early as the fourth quarter of 2026.

Reduced expectations for higher interest rates may lessen one source of support for the Polish Zloty. Ghose said this could result in the PLN underperforming the Czech koruna (CZK), after the two currencies traded broadly in line over recent quarters.

Market participants are also likely to monitor policy developments across Central and Eastern Europe as central bank expectations continue to evolve. The National Bank of Poland's upcoming policy meetings and future inflation releases will be closely watched for further indications of the policy outlook.