NBP Governor Adam Glapinski said inflation should be close to the 2.5% target this year and possibly in 2027, which is expected to feed into new forecasts due in March. Monetary council member Przemyslaw Litwiniuk said a March rate cut is quite likely and pointed to possible further inflation declines linked to changes in the CPI basket and the suspension of the flash estimate.
Litwiniuk said rates should probably fall to 3.50% from the current 4.00%. Market pricing implies a lower 3.25% terminal rate, which differs from NBP communication centred on 3.50% as the end point of the easing cycle.
Poland Rates And Inflation Outlook
EUR/PLN has traded in a tight range, narrowing from 4.200-4.230 in January to 4.210-4.230 in February. Risks are described as slightly skewed below 4.210, with no clear directional view stated.
Based on the dovish signals we saw from the National Bank of Poland this time last year, the path for rate cuts seemed clear. We heard NBP Governor Glapinski and council member Litwiniuk suggest that rates could fall from 4.00% to a terminal rate of 3.50% in 2025. This was driven by expectations that inflation would approach the central bank’s 2.5% target.
At that time, the market was even more aggressive, pricing in a terminal rate closer to 3.25%. This reflected a strong belief in a continued series of downside inflation surprises that would push the NBP to cut rates even faster. That divergence between the central bank’s guidance and market pricing created a specific set of risks.
Looking back, while the NBP did begin an easing cycle, the aggressive cuts priced by the market did not fully materialize due to persistent underlying price pressures. For example, recent data for January 2026 shows Polish corporate wage growth remains very strong at 11.9% year-on-year, complicating the outlook for inflation. This stickiness means the debate over the final interest rate level is far from over.
Trading Implications For Eur Pln
The tight EUR/PLN range of 4.210-4.230 we saw in early 2025 has since loosened. The pair is now trading closer to 4.280, reflecting the reality that the NBP has been more cautious than the market initially anticipated. This suggests that the zloty’s strength has a clear ceiling as long as rate differentials with the Eurozone are expected to narrow at a slower pace.
For derivative traders today, this renewed uncertainty suggests that positioning for a significant breakout in EUR/PLN volatility is a key strategy. With the market potentially under-appreciating the NBP’s caution, buying options like straddles or strangles could be effective. This would allow a trader to profit from a large price move in either direction leading up to the NBP’s March meeting.
In the interest rate markets, forward rate agreements (FRAs) that price in NBP rate cuts later this year may now look mispriced. Given the strong wage data, there is a growing risk the NBP will have to hold rates steady for longer than expected. Traders should consider positions that would benefit from an upward repricing of Polish interest rate expectations in the coming weeks.
