EUR/PLN likely to witness gradual rise through this year, says Commerzbank

The EUR/PLN currency pair is expected to witness a gradual rise through this year, after showcasing a significant rally over the past month, according to a recent report from Commerzbank. However, this has been part of a broader rally in EM FX – the zloty has not outperformed peers such as the forint over the past month.

The National Bank of Poland (NBP) holds its first rate-setting meeting of the year today: it is widely expected that the base rate will not be changed. Today's meeting holds less intrigue than the December one: when the MPC met in December, the November inflation data had just been published showing inflation shooting up to the target 2.5 percent -- there had been concern that the central bank might change its assessment abruptly.

However, the governor stuck to his stance that rates are likely to remain flat until the end of 2018. Since that time, data have in fact supported a dovish stance: inflation has dropped back to below-target 2 percent in December and core inflation remains subdued at just c.1 percent

Additionally, the MPC no longer refers to a tightening labor market as a source of risk. The MPC current balance between doves and hawks suggests that no rate hike is likely until H2 2018, the report added.

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