EUR/PLN: Tighter Polish monetary policy to support the zloty – Danske Bank

European recovery and inflation are supporting the Polish zloty. Therefore, economists at Danske Bank expect the EUR/PLN to grind lower towards 4.42 over the next months.

Early Fed policy tightening could weigh on PLN

“The Polish central bank will probably be forced to hike rates to dampen higher inflationary pressures. Combined with Poland’s relatively strong external balances, we expect PLN to gradually strengthen, even though markets are already pricing several rate hikes over the next year. However, higher inflation in Poland is likely to push EUR/PLN slightly higher in the longer term.”

“A stronger USD resulting from earlier Fed policy tightening and/or global economic headwinds could weaken PLN.”

“More aggressive policy tightening by the Polish central bank than in our baseline could strengthen PLN significantly.” 

“EUR/PLN forecast: 4.54 (1M), 4.48 (3M), 4.42 (6M), 4.45 (12M), 4.45 (end-2022).”