Zloty Prints New Two-Year Highs Before Stabilising

EUR/PLN bottomed out at PLN4.4823, a new two-year low, found a base there and stabilised. The brief foray below the PLN4.4828/26 area, which limited losses in February 2022, comes after Poland's preliminary Q1 GDP data this morning came in stronger than expected. The rate last changes hands -161 pips at PLN4.4873, while the RSI sits in oversold territory.

• POLGBs have extended losses as participants have parsed upbeat GDP data in conjunction with a slow deceleration in core CPI inflation and generous fiscal pledges unveiled over the weekend. When this is being typed, POLGB curve runs steeper, with yields sitting 4.5-7.6bp higher. The steepening impetus has been evident in the local FRA curve as well.
• Just to confirm, the NBP published official core CPI figures for April. The annual increase in core prices slowed to +12.2% from +12.3% in March, in line with expectations. At the same time, a quick look at initial reaction of sell-side analysts suggests that they continue to expect core inflation to ease in a gradual manner.
• Secretary General of the ruling Law and Justice, Krzysztof Sobolewski, confirmed that the party will be unveiling more campaign pledges in phases, with the next round coming up closer to the end of 1H2023. The stimulus measures announced so far will cost around PLN26bn and led to hawkish NBP repricing at the start to the week.