Societe Generale expects the National Bank of Poland (NBP) to keep its policy rate at 3.75%, extending a hold through the second half of 2026 and into early 2027. Inflation is described as within the central bank’s 1.5%–3.5% target band, with headline CPI at 3.1% year on year and core at 3.0% in May. Economic activity has firmed, as 1Q GDP rose 0.6% quarter on quarter and 3.5% year on year.
Market pricing points to a different path. Money markets imply about 75bp of tightening over the next 12 months for Poland, while Hungary is priced for 71bp of easing. The source text also references comments from finance minister Domanski about the inflation data and a growth revision, and includes a query over relative performance between the HUF and local bonds versus the PLN in the second half of the year.
Market Expectation Versus Central Bank Outlook
We see a clear mismatch between the market’s expectations and the likely path for Poland’s interest rates. Money markets are pricing in about 0.75% in rate hikes over the next year, but we believe the National Bank of Poland (NBP) will keep its policy rate steady at 3.75%. This creates an opportunity for traders who agree with our view.
The case for the NBP staying on hold is strong and supported by recent data. Headline inflation of 3.1% is comfortably within the central bank’s target band of 1.5% to 3.5%, and the economy is performing well with GDP growing at 3.5% year-on-year. Furthermore, the unemployment rate has remained stable, hovering near a record low of 5.0%, suggesting the economy is neither overheating nor in need of stimulus.
This situation suggests derivative traders should consider positioning for Polish interest rates to remain lower than what the market is currently pricing. This involves trades that profit if the expected rate hikes do not happen, such as receiving fixed rates on interest rate swaps. Historically, when markets misprice a central bank’s intentions so significantly, the eventual correction can be quite profitable.
Poland-Hungary Relative Value And Currency Outlook
We also see a compelling relative value opportunity when comparing Poland to Hungary. While markets are pricing in rate hikes for Poland, they are expecting around 0.71% of rate cuts in Hungary as the central bank there continues its easing cycle from a much higher policy rate. This policy divergence between a stable NBP and a dovish Hungarian central bank should favor the Polish Zloty.
Therefore, we believe derivative trades that benefit from the Zloty strengthening against the Hungarian Forint are attractive in the coming weeks. This could involve using FX forwards or options to take a long PLN/HUF position. The fundamental driver is clear: a stable, higher-yielding currency is likely to outperform one with a falling interest rate.
