Poland’s June inflation fell to 2.5%, down from 3.1% and in line with the National Bank of Poland’s target, after declines spread across the consumption basket. Food prices again led the downside surprise, while core inflation was seen broadly steady, estimated at 3.0–3.1%. The softer reading has shifted rate expectations: markets have removed the prospect of further tightening and, instead, are pricing around 10bp of cuts over the longer term.
The policy stance remains in focus, with expectations for inflation to worsen later in the year keeping the NBP policy rate unchanged for longer, even as near-term market rates come under downward pressure. In FX, EUR/PLN has tested the 4.300 area, which has so far held as resistance. A signal from the NBP next week that it is open to a rate cut would add to the case for EUR/PLN to move higher.
Zloty Outlook Shifts Amid Softer Inflation
With Polish inflation unexpectedly hitting the National Bank of Poland’s 2.5% target, our view on the zloty has shifted. The market is no longer pricing in rate hikes and has started to factor in the possibility of cuts. We see this as a clear signal that downward pressure on Polish market rates will build, undermining the zloty’s recent strength against the euro.
This view is reinforced by the latest data from Statistics Poland, which confirmed the June 2026 flash estimate, marking the lowest inflation reading in over three years. In response, Poland’s 2-year bond yield has already slipped to 4.95%, reflecting the market’s anticipation of a more dovish NBP. This is happening while recent Eurozone PMI figures show continued economic softness, adding to regional disinflationary trends.
Opportunities in EUR/PLN Ahead of NBP Meeting
For derivative traders, this creates a compelling opportunity in the EUR/PLN pair over the next few weeks. We believe buying call options on EUR/PLN with a strike price at or just above the 4.300 resistance level is the most prudent strategy. This allows for participation in a potential breakout higher if the NBP signals an openness to rate cuts, while strictly defining the maximum risk.
This situation is reminiscent of late 2023 when the NBP delivered a surprise rate cut that sent the EUR/PLN sharply higher. The upcoming NBP meeting next week is the key catalyst that could unlock a similar move. Therefore, positioning through options allows us to leverage this potential volatility ahead of the central bank’s announcement.
