EUR/PLN likely to head up towards 4.35 level over coming quarter, says Commerzbank

The EUR/PLN currency pair is expected to head up towards the 4.35 level over the coming quarter, according to the latest research report from Commerzbank.

At today's MPC meeting, the National Bank of Poland (NBP) is expected to reiterate its ultra-dovish stance. At the last meeting, the central bank made surprise moves in this direction, even though inflation projections were in fact raised (to well above target for 2019).

To counter this forecast change, Governor Adam Glapinski went to lengths at the press conference to emphasise that his economists had used certain oil price assumptions which were already out of date as the oil price had since plummeted; he reiterated his view that rates could remain flat even through 2020.

Still, at the time, such remarks were being made against a background of higher official inflation forecasts. Since then, however, inflation both in Poland and in euro zone has softened noticeably – Polish inflation dropped sharply to 1.2 percent for November; and early indications are that core inflation could have moderated all the way back to 0.7 percent in November from 0.9 percent in October.

"This makes it very likely that whatever few hawkish remarks were beginning to surface within the MPC, will be snuffed out in today's proceedings – we will likely witness an overbearingly dovish assessment (although no official change in statement is expected)," the report commented.