Outlook
Polish zloty faces a mixed near-term path. The NBP has begun a cycle of monetary policy easing (rate cuts) as inflation trends lower, which supports domestic growth but can weigh on the currency if policy becomes too dovish for longer than expected. Inflation at 2.8% in late 2025 provides room for continued easing, while EU funds and resilient domestic demand underpin a supportive backdrop for the economy. However, political uncertainties under Nawrocki’s administration and a mixed trade balance cap upside potential, leaving the PLN vulnerable to shifts in risk appetite and external conditions. Market momentum will hinge on data surprises and how quickly reforms and EU inflows translate into stronger growth.
Key drivers
- Inflation trend: annual inflation easing to 2.8% in October 2025, supporting a more permissive policy stance.
- Monetary policy: ongoing rate cuts by the NBP (May 2025 and July 2025 moves) to stimulate growth amid easing inflation.
- Growth backdrop: GDP expected to rise in 2026 supported by EU funds, resilient consumption, and recovering exports.
- Trade dynamics: mixed signals—€4.6 billion surplus in H1 2024 followed by a widening deficit to February 2025—creating a cautious growth outlook.
- Political environment: Nawrocki presidency introduces uncertainty and potential reforms slowdowns, influencing market confidence.
- Inflation–growth mix: softer inflation allows policy accommodation, but political and external factors keep the outlook cautious.
Range
PLN/USD at 0.2817, 1.5% above its 3-month average of 0.2775, having traded in a fairly stable 5.5% range from 0.2717 to 0.2867.
PLN/EUR at 0.2370, near its 3-month average, trading in a stable 1.1% range from 0.2358 to 0.2383.
PLN/GBP at 0.2068, at 7-day highs near its 3-month average, trading in a stable 2.3% range from 0.2043 to 0.2089.
PLN/JPY at 43.51, at 7-day lows near its 3-month average, trading in a fairly stable 4.7% range from 42.36 to 44.33.
What could change it
- Surprise inflation uptick or weaker data prompting a slower or halted easing path by the NBP.
- Clear progress on reforms or stronger EU fund inflows lifting growth confidence.
- A narrowing of the trade deficit or better export outlook boosting external-sector support.
- Shifts in global risk sentiment or USD strength driving risk-off moves.
- Political developments that increase reform momentum or, conversely, raise policy uncertainty.
