PLN: Dovish NBP Talk Continues To Come In, Keeping Zloty Under Pressure

EUR/PLN extends gains this morning, following yesterday's 1.3% swing driven by the NBP's dovish pivot and US tariff announcement. The pair last deals at 4.2408, up 150 pips on the day, with bulls looking for gains towards and beyond the psychologically significant 4.25 figure.

• NBP Governor Adam Glapinski used his press conference to repeatedly signal the MPC's radical dovish pivot and guided that another set of dovish data could justify a rate cut, possibly as large as 50bp and as soon as next month. The Governor suggested that the MPC could reduce rates by 50bp, then another 50bp, and then some more this year, and could bring the reference rate (currently at 5.75%) as low as to 3.50% in 2026.
• MPC's Ludwik Kotecki subsequently told TOK FM radio that a rate cut is "very, very likely" in May as economic data for March will likely be closer to weak February statistics than decent January ones. He thinks a 50bp cut is "in play" and there is room for 50-100bp worth of easing through the whole year. Kotecki revealed that there are now "fairly many" doves in the MPC. Cezary Kochalski echoed some of these comments in a Bloomberg interview, noting that he would consider backing a 50bp cut in May.
  • Joanna Tyrowicz stuck to her hawkish stance, writing on LinkedIn this morning that demand-driven inflation has not slowed and is not close to the target, while the latest projection puts the probability of hitting the target at 60%, assuming the current level of interest rates. She suggested that lower rates would delay the return to the target until end-2027.
• POLGB yields have sunk across the curve, on top of yesterday's downswings induced by Governor Glapinski's media briefing and the subsequent NBP repricing. Strong gains for POLGBs have driven 10-year POLGB/Bund spread to 272bp today, which is the narrowest level since 2021. Polish FRA contracts remain under pressure, with the 3-month WIBOR/9x12 FRA spread last seen at 186bp (ahead of the daily 10:00BST/11:00CEST WIBOR fixing).
• Local equity benchmarks have sunk further amid a global risk-off tone, with sharp sell-offs over the past couple of days resulting in the formation of topping technical patterns. The WIGBANK Index has shed 4.2% today, with investors assessing the fallout from the NBP's dovish turn for the banking sector.