BBH expects the Reserve Bank of India (RBI), National Bank of Poland (NBP), Peru’s central bank (BCRP) and the Bank of Korea (BOK) to keep policy rates unchanged at their meetings this week. The expected hold comes with different risk directions across the four banks.
The RBI is expected to keep the policy rate at 5.25% for a second straight meeting on Wednesday. A possible change would be a move from a neutral stance to a restrictive stance due to a weaker inflation outlook.
Central Banks Expected To Hold
The NBP is expected to keep the policy rate at 3.75% on Thursday, after a 25 bps cut on 4 March. Interest-rate swaps price in 60 bps of hikes over the next twelve months.
The BCRP is expected to keep rates at 4.25% for a seventh straight meeting on Thursday. Headline and core CPI inflation rose in March and moved above the bank’s 1 to 3% target range, which leaves open the chance of a hike.
The BOK is expected to keep the policy rate at 2.50% for a seventh straight meeting on Friday. A possible change is a more hawkish rate path, with hikes replacing a steady-rate view over the next six months.
Looking back at the analysis from early 2025, we can see that the hawkish risks we flagged in emerging markets largely materialized. Central banks in India, Poland, and Korea all proceeded with tightening cycles to combat the inflation that was becoming persistent at the time. This history provides a crucial backdrop for positioning derivative trades today.
Derivative Positioning Implications
For India, the Reserve Bank of India’s potential shift to a restrictive stance in 2025 was realized, with the policy rate eventually rising to 6.50% before pausing. With inflation now moderating to 5.1% as of February 2026, but still above target, the focus has shifted entirely from hikes to the timing of cuts. Traders should be using overnight indexed swaps to bet on the policy rate remaining elevated through the summer before any easing begins.
The market’s expectation for rate hikes in Poland during 2025 was also correct, as the NBP moved its policy rate up to 5.75% later that year. Now, the situation has reversed, with recent inflation data for March 2026 showing a sharp drop to just 2.5%, well within the bank’s target range. This suggests traders should position for rate cuts using Polish zloty forward rate agreements, as the NBP now has significant room to ease policy.
In Peru, the upside inflation risks we saw in 2025 led the BCRP to continue its hiking cycle before it became one of the first to begin easing policy. The policy rate, now at 6.00%, has been steadily decreasing from its peak as inflation has cooled to 2.8% annually. Traders should use options on Peruvian sol futures to protect against a potential pause in the easing cycle, as the bulk of the rate cuts may already be priced in.
The hawkish tilt we anticipated from the Bank of Korea in 2025 resulted in its policy rate moving to the current 3.50%, where it has remained for over a year. The BOK is now in a difficult position, with inflation still sticky at 3.1% while exports are showing signs of weakness. This conflicting data suggests traders should use strategies like strangles on Korean Treasury Bond futures to profit from a potential spike in volatility when the bank is eventually forced to move.
