Expert: decision on interest rates supports Polish currency

The Monetary Policy Council (MPC) did not introduce changes in interest rates during its first meeting after the summer break, which gives the złoty strong support. Forecasts do not predict rate cuts in the near future – it is possible that we will see them only in the second half of 2025, which means that the Polish currency may maintain its strength for a longer period.

Experts emphasize that the stable policy of the Monetary Policy Council makes the złoty one of the preferred currencies in the eyes of global investors. “The Monetary Policy Council has not changed the level of interest rates for almost a year, which makes the złoty one of the most desirable currencies in the world,” notes Michał Stajniak, Deputy Director of the XTB Analysis Department. An example of this is the dollar to złoty exchange rate test at 3.80 and the euro quotes, which fell below 4.30.

The MPC statement after the decision stated that the current level of interest rates is conducive to achieving inflation targets in the medium term. Although inflation has recently increased, which is the result of administrative price regulation, the economy is still doing well and wage growth remains high. This factor may contribute to the stabilization of core inflation, which in July reached 3.8% year-on-year.

Currently, the market does not expect rate cuts in the next three months, but in the perspective of a year, it predicts cuts of around 90 basis points, which could mean even three cuts. Some MPC members suggest that the room for such decisions will appear only in the second half of next year.

Long-term forecasts predict that interest rates may fall to 3.75%, which is two percentage points less than currently. The stability of interest rates in recent months and the prospect of maintaining them for a longer period strengthens the złoty. However, it is worth recalling that a year ago the Monetary Policy Council decided to controversially reduce rates by 75 basis points, and later by an additional 25 basis points before the parliamentary elections in October

However, if inflation improves significantly over the next six months, there is a possibility that the MPC will decide to cut rates earlier, for example in May, just before the upcoming presidential elections.

Looking at monetary policy globally, it is worth paying attention to the situation in the United States. The latest data from the labor market, in particular the JOLTS report, show a decline in the number of new jobs, which has increased the chances of the Fed cutting interest rates by 50 basis points to 44%, from the previous 33%.

– In Poland, there are no prospects for quick interest rate cuts, while both the Fed and the ECB are planning cuts, theoretically it should weaken the euro and the dollar – comments the XTB expert. He adds, however, that such decisions have long been expected and have already been taken into account by investors. However, profits may be realized on the currency market.

This phenomenon is part of a seasonal pattern that typically leads to a temporary weakening of the złoty in September, after the summer holidays. A similar situation is also occurring on Wall Street, where a deterioration in sentiment often results in capital outflows from emerging markets.

Stajniak predicts that the dollar exchange rate may rise to 4 zlotys in the near future, which will still be an attractive result in the context of the USD/PLN pair.