Zloty Resumes Gains As Ruling Party's Campaign Promises Trigger Hawkish NBP Repricing

The zloty extends its recent appreciation trend, with EUR/PLN close to testing the round figure of PLN4.5 this morning. The rate last changes hands -115 pips at PLN4.5092 and bears set their sights on PLN4.4826, which limited losses on Feb 16. Bulls see the 20-EMA at PLN4.5746 as their initial target.

• The NBP last week said (see our review here) that further PLN gains would help contain price pressures. The central bank estimates that further gains for the currency could lower 2023 inflation by around 1pp.
• However, generous fiscal pledges unveiled by the ruling party over the weekend inspired hawkish NBP repricing, with the local FRA curve shifting higher as participants pared calls for rate cuts by the year-end.
• The research desks of ING and mBank said that they estimate the campaign pledges announced by the ruling party at around ~1% of GDP, with more likely to come closer to the autumn election despite still elevated inflation.
• Separately, Poland's statistics office released final CPI data for April, which confirmed that inflation slowed to +14.7% Y/Y. Local sell-side desks estimate that core CPI may have edged lower to +12.2% Y/Y, with official readings due tomorrow.
• Poland's current account balance for March will hit the wires at 13:00BST/14:00CEST. Analysts in a Bloomberg poll expect a surplus of EUR2.465bn.