Polish Zloty to Remain Under Pressure as NBP Holds Steady, Societe Generale Says

The Polish zloty is likely to trade within a narrow range for the foreseeable future as the National Bank of Poland (NBP) maintains its current interest rate stance, according to a new analysis from Societe Generale. The French bank’s foreign exchange strategy team expects the NBP to keep rates unchanged through at least the middle of next year, limiting the zloty’s upside potential against the euro and the US dollar.

Societe Generale’s Rate Outlook for Poland

In a note published this week, Societe Generale strategists highlighted that the NBP’s cautious approach reflects persistent domestic inflation pressures and an uncertain global economic environment. The bank’s base case sees the NBP reference rate remaining at 5.75% through the second quarter of 2026, with the first rate cut not arriving until later next year. This view aligns with market pricing, which has recently scaled back expectations for aggressive easing.

“The NBP has consistently signaled that it is in no rush to lower borrowing costs,” the note stated. “Governor Adam Glapiński has emphasized that inflation remains above the target band and that wage growth continues to fuel price pressures in services. Until there is clear evidence that inflation is sustainably returning to the 2.5% target, the central bank is likely to remain on hold.”

Zloty Trading Range and Key Levels

Societe Generale forecasts the EUR/PLN pair to oscillate between 4.25 and 4.35 over the coming months, with a slight bias toward the weaker side of that range. Against the dollar, the zloty is expected to trade between 3.90 and 4.05. The bank notes that the zloty’s carry appeal remains intact, but without a catalyst from the NBP, the currency is unlikely to break out of its recent consolidation pattern.

Poland’s strong economic fundamentals—including robust GDP growth, a tight labor market, and improving external balances—provide a floor for the currency. However, the lack of monetary policy divergence with the European Central Bank, which is also expected to hold rates steady in the near term, reduces the zloty’s relative attraction.

What This Means for Investors and Businesses

For Polish exporters and importers, the prolonged period of zloty stability offers a degree of predictability. Companies with exposure to euro-denominated revenues or costs can plan their hedging strategies with greater confidence. For foreign investors holding Polish government bonds, the carry trade remains attractive as long as the NBP keeps rates elevated relative to the eurozone.

However, the extended hold also means that any unexpected shift in the NBP’s communication—whether hawkish or dovish—could trigger sharp moves. Markets are particularly sensitive to any change in tone regarding the timing of the first rate cut. A more hawkish-than-expected statement could push the zloty to the stronger end of the forecast range, while hints of earlier easing could see it weaken toward 4.40 against the euro.

Conclusion

The Polish zloty is caught between supportive domestic fundamentals and a patient central bank. Societe Generale’s analysis suggests that until the NBP signals a clear path toward rate normalization, the currency will remain range-bound. Investors should monitor Polish inflation data and central bank commentary closely for any shift in the policy outlook that could break the zloty out of its current trading pattern.

FAQs

Q1: Why is the NBP keeping interest rates unchanged?
The NBP is maintaining its current rate of 5.75% because inflation in Poland, while declining, remains above the central bank’s 2.5% target. Governor Glapiński and the Monetary Policy Council are concerned about persistent price pressures from wage growth and services inflation, and want to see more evidence that inflation is sustainably returning to target before easing policy.

Q2: What is Societe Generale’s forecast for the Polish zloty?
Societe Generale expects the zloty to trade in a range of 4.25–4.35 against the euro and 3.90–4.05 against the US dollar over the coming months. The bank sees no major breakout unless the NBP changes its policy stance or there is a significant external shock.

Q3: How does the NBP’s policy compare to other central banks in the region?
The NBP’s cautious stance is similar to the Czech National Bank, which has also held rates steady amid sticky inflation. In contrast, the Hungarian central bank has been more aggressive in cutting rates, which has put pressure on the forint. Poland’s more conservative approach supports the zloty’s relative stability compared to some regional peers.