Polish inflation data came in below forecasts, prompting a dramatic shift in monetary policy expectations that’s immediately impacting the zloty. Commerzbank’s Tatha Ghose reports that market pricing for 2026 rate hikes has completely vanished following the surprise inflation miss, with traders now unwinding previously bullish zloty positions.
The softer inflation print marks a significant turning point for Poland’s monetary outlook. Markets had been positioning for a tightening cycle extending into 2026, but those bets have now been eliminated. Ghose indicates the data could even trigger renewed rate cut discussions as early as the fourth quarter of this year, representing a full policy reversal from previous expectations.
Currency traders and fixed income desks should anticipate continued zloty weakness as rate differentials narrow. Polish bond yields are likely to compress further as markets reprice away from the hawkish scenario. Asset managers with PLN exposure may need to reassess hedging strategies given this fundamental shift in the central bank outlook.
FXnCO Insight
Traders should monitor PLN crosses for further downside pressure and consider fading zloty strength on any rebounds as the rate hike narrative collapses.
Source: FXStreet