January data from Poland strengthened expectations of a 25 bp interest rate cut at the March Monetary Policy Council meeting. The reports showed weaker activity and prices, along with slower wage growth.
Manufacturing output in January missed forecasts and fell. Construction output dropped 12.8% year on year, with declines in 21 of 34 tracked sectors.
Poland Data Reinforces Rate Cut Expectations
Producer price inflation fell again to -2.6% year on year in January. This was the biggest drop since December 2024 and came in below the market consensus.
Overall, the data point to easing inflation pressure and support the case for a March rate cut. The Polish zloty may lag peer currencies in the coming months, unless Hungarian policy also shifts in a more dovish direction.
Recent releases suggest the National Bank of Poland is likely to cut rates by 25 basis points at its March meeting. January 2026 data showed inflation falling to 2.9%, well below expectations and close to the bank’s 2.5% target. This adds to the disinflation trend that has been building since late last year.
Signs of a slowdown are also clearer. Poland’s Q4 2025 GDP growth was revised down to 0.8%. January industrial production also fell unexpectedly, pointing to a weak start to 2026. This fits with a broader regional slowdown after the post-pandemic rebound faded.
Market Positioning Ahead Of March Meeting
It is worth recalling the central bank’s actions in 2025, when it surprised markets with a large 75 basis point cut in September. That move showed it was willing to support the economy as growth and inflation cooled. A cut now would follow the same policy direction.
For derivatives traders, this outlook argues for positioning for a weaker zloty, especially versus the euro or US dollar. Buying EUR/PLN call options could be one way to benefit if the zloty falls. This approach limits downside risk while leaving room for gains if the central bank cuts as expected.
Hungary is also important to watch, because it is a key regional comparison. If Poland cuts while Hungary keeps rates steady or signals a pause, the zloty may underperform the forint. That relative-value setup could create opportunities in the weeks ahead of the policy meeting.
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