The National Bank of Poland (NBP) left its policy rate unchanged at 3.75% on Tuesday, matching expectations and describing a cautious stance as it waits for fresh data to shape subsequent decisions. Policymakers said the outlook for growth and prices will determine the next steps, while keeping attention on inflation risks and maintaining a wait-and-see approach.
The NBP pointed to factors that could complicate the inflation trajectory, including fiscal policy, strong wage growth and legislation affecting fuel costs, all of which could add upward pressure to consumer prices. It also referred to the external backdrop, citing heightened geopolitical uncertainty as a continuing risk to Poland’s economy, and repeated that it stands ready to intervene in the FX market if needed to address zloty volatility. After the decision, EUR/PLN eased from around 4.2370 to about 4.2340, trading just below its 200-day SMA.
NBP’s Hawkish Hold and Implications for Policy
Based on the National Bank of Poland’s decision to hold rates at 3.75%, we believe the Polish Zloty will remain in a relatively tight range in the immediate future. The central bank’s “wait-and-see” approach removes any strong directional catalyst for now. Recent inflation data from May 2026, which showed a slight uptick to 3.4% year-over-year from 3.0% in April, reinforces this cautious stance and supports our view of limited movement.
We are treating the NBP’s current position as a hawkish hold, as policymakers are clearly more concerned about inflation than slowing growth. Strong wage growth, which recently posted an 11.5% year-over-year increase for the first quarter of 2026, means there is little reason for the bank to consider easing policy. Therefore, we would avoid any derivative positions that bet on interest rate cuts in the second half of the year.
Market Volatility, Options Strategies, and FX Intervention
This environment of high uncertainty but a firm policy stance is likely to keep implied volatility elevated for Zloty currency options. Looking back at similar periods of geopolitical tension in 2023, volatility remained high even as the currency traded sideways, making it a favorable market for selling options. We see an opportunity in the coming weeks to sell EUR/PLN strangles, collecting premium while betting that the pair remains between key technical levels.
We are also taking the bank’s warning of potential FX market intervention very seriously, as this puts a cap on how much the Zloty can weaken. The NBP has a history, particularly in 2024, of verbally intervening to support the currency when it approaches psychologically important levels against the Euro. This makes us cautious about buying far out-of-the-money call options on EUR/PLN, as the central bank’s presence could limit potential profits from a sudden spike.
