Zloty Holds Tight Range As Dust Settles After NBP Turmoil

EUR/PLN stabilises after a 0.67% sell-off on Friday, with the zloty showing little reaction to a dovish shift in NBP expectations inspired by last week's rhetoric from Governor Adam Glapinski. The pair last operates +20 pips at 4.4578, with bulls looking for gains past the 50-DMA/round figure at 4.4967/4.5000 before targeting Jun 1 high of 4.5480. Bears see Jul 4 low of 4.4138 as their initial target.

• The NBP released its full Inflation Report for July 2023, which provided some more details on the new macroeconomic forecasts prepared by the staff. Their calculations imply a 53% probability that headline inflation will be below the upper end of the target range in 4Q2025, but the projection assumes an unchanged level of interest rates. They believe that double-digit wage growth is the main upside risk to the inflation outlook.
• This comes after NBP Governor Glapinski effectively opened the door for rate cuts this year, which resulted in a dovish adjustment to NBP rate-cut wagers, with multiple desks altering their calls (more details in our forthcoming review). Although the Governor called the magnitude of market rate-cut expectations excessive, he officially ended the tightening cycle and signalled that the central bank could lower rates in September.
• The next point of note on Poland's economic docket is final June CPI data, due Friday.