EUR/PLN should be trading more like 4.42 – ING

EUR/PLN dipped to 4.43 after the National Bank of Poland (NBP) kept interest rates unchanged but later returned to 4.44. Economists at ING analyze the pair’s outlook.

NBP keeps rates unchanged despite expectations

NBP left rates unchanged despite market and survey expectations. The market is repricing expectations, particularly at the short end of the curve upward, resulting in bear flattening. Higher rates at the short end are positive news for Zloty.

We remain positive on PLN. Rates repricing will continue today and current rate differentials already indicate EUR/PLN should be trading more like 4.42. 

However, the key today will be the NBP Governor's press conference which should show what was behind the surprise decision to hold rates and what to expect next. We believe rates will remain unchanged in December as well, but next year is still a question mark given the inflation profile.