Zloty Tanks After Expectation-Busting Rate Cut From NBP

EUR/PLN shoots higher after the NBP trimmed interest rates by 75bp, triple the size of the expected move. The rate has soared through key resistance levels, breaking above the 4.55 mark, and last deals +675 pips at 4.5601. It has last operated in this territory in early May, with bulls now looking to stage an attack on 4.5894, the 38.2% retracement of the Sep 30 2022 - Jul 31 bear leg.

• 20 out of 36 economists surveyed by Bloomberg were looking for a 25bp rate cut today, while the rest expected an on-hold decision, even as a key condition (sub-10% inflation) outlined by Governor Glapinski has not been met.
• Back in July, the Governor played down the potential for 100bp worth of easing this year, guided that any rate cuts would likely be delivered in 25bp increments and sought to affirm the NBP's credentials as a conservative and prudent central bank.
• POLGBs have turned bid, with yields sitting 1.6-5.2bp lower at typing, as 3s outperform. Polish FRA contracts have registered significant losses across the curve, printing new cyclical lows, with 3-Month WIBOR/PLN 3x6 FRA spread widening to 118bp.
• The central bank will publish the full statement from today's meeting at the top of the hour.