The Czech National Bank (CNB) and the National Bank of Poland (NBP) both kept policy rates unchanged, at 3.50% and 3.75% respectively. Their messaging pointed to different balances of risk.
In the Czech Republic, Governor Aleš Michl described a wait-and-see approach and said policy is already tight enough. The CNB indicated it may look through short-term inflation pressure linked to supply factors.
Policy Signals And Inflation Risks
In Poland, President Adam Glapiński referred to higher upside inflation risks in the second half of the year. He cited the ending of energy subsidies and the return of food VAT as possible sources of renewed inflation pressure.
Recent stabilisation in Central and Eastern European foreign exchange has been linked to better global sentiment. With no clear hawkish trigger, further currency gains are expected to be limited, keeping rates and currencies close to current ranges.
The guidance implies limited room for more tightening in the Czech Republic, even though market rate expectations remain elevated. In Poland, the focus has moved away from cuts towards a longer hold, with any tightening depending on whether inflation stays persistent.
The diverging messages from the Czech and Polish central banks suggest we should prepare for range-bound currency movements in the coming weeks. With the Czech National Bank sounding dovish and the National Bank of Poland remaining cautious, there isn’t a clear signal for a major rally in either currency. This environment suggests selling volatility may be a sound strategy.
For the Czech koruna, the central bank’s willingness to look past short-term inflation limits its upside potential. Recent data showing April 2026 inflation at 3.1% supports their wait-and-see approach, as it’s down from the highs we saw in 2025 but still above target. We should consider using options to bet that the EUR/CZK exchange rate will remain stable, possibly trading between 24.70 and 25.00.
Trade Ideas And Range Bound FX
Conversely, the Polish zloty appears to have more support due to the central bank’s concern over returning inflation. The recent uptick in Poland’s CPI to 4.5% in April, linked to the phase-out of government subsidies, makes their cautious stance credible. This suggests the zloty may be more resilient than the koruna in the near term.
Given this contrast, a relative value trade seems appropriate. We could structure a position that is long the Polish zloty against the Czech koruna, capitalizing on the different policy biases. This trade profits from the divergence without taking an outright view on the direction of global risk sentiment, which we remember caused significant volatility back in 2025.
