- Polish central bank cuts interest rates deeper than expected, draws criticisms.
- Politics appear to be influencing central bank action rather than the economy.
- Polish inflation is still in double-digit territory despite recent declines.
The USD/PLN is pushing higher following an interest rate cut from the National Bank of Poland (NBP), sending the Polish Zloty (PLN) into a tailspin. The NBP cut their reference rate from 6.75% to 6% on Wednesday, and the move is sending the PLN to five-month lows, erasing much of 2023’s gains.
Polish annual inflation remains slightly above 10%, far below the peak of 18% from earlier this year but still well above the NBP’s target of 2.5%. The Polish economy is also showing signs of a deepening slowdown, and too much movement from the NBP could exacerbate problems for the Polish economy.
Polish central bank accused of political motivations
NBP Governor Adam Glapinski, an open supporter of the governing Law and Justice conservative party, has been criticized for the poorly timed rate cut. Marek Tatala, vice president of the Economic Freedom Foundation, publicly stated that the central bank has “joined the election campaign” using his position at the NBP to try and stoke popularity for the ruling party by easing borrowing costs.
Reductions to the inflation rate will help to make lending rates cheaper in the short term, but Polish politician Ryszard Petru noted in a statement that cutting rates will be “pro-inflationary”, which could make life harder for the Polish population moving forward.
USD/PLN technical outlook
The USD/PLN has broken well above the 100-day EMA on the daily candles and appears set to continue breezing past the 4.3000 psychological level as the PLN eats away at the progress made through the year. The USD peaked against the Zloty in late 2022 near 5.000, reaching a floor of 3.9354 in July.
Technical resistance currently rests at the upper bound of April’s consolidation zone, just below 4.5000, and any bearish resurgence will face dynamic support from the 100-day EMA that is beginning to rotate bullish from 1.4500.
USD/PLN Daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD eases toward 1.0700 as USD finds feet ahead of ADP, Fed Minutes
EUR/USD is retreating toward 1.0700 in the early European session on Wednesday. The pair struggles, as the US Dollar finds its feet in the aftermath of the dovish Fed Chair Powell's comments. Cooling EU inflation keeps the Euro undermined. Eyes turn to US ADP data, Fed Minutes.
GBP/USD flatlines below 1.2700, looks to US data/Fed minutes
GBP/USD is lacking a firm directional bias below 1.2700 on Wednesday, reversing early gains. Traders appear reluctant and prefer to wait on the sidelines ahead of the FOMC minutes while the UK elections on Thursday also keep them on the edge. US ADP data eyed as well.
Gold eyes a range breakout, as Fed Minutes looms
Gold price is trading around a flatline near $2,330 early Wednesday, as traders consider the recent US jobs data and Federal Reserve Chairman Jerome Powell’s speech, bracing for yet another busy US calendar.
Bitcoin struggles around $64,000 level
Bitcoin faces resistance near the $64,000 daily level, leading to a 1.05% decline in trading on Wednesday. Ethereum and Ripple similarly encounter resistance, resulting in 1% and 0.5% declines, respectively.
ADP Employment Change Preview: US private sector expected to add 160K new jobs in June
The United States ADP Research Institute will release its monthly report on private sector job creation for June. The announcement is expected to show that the country’s private sector added 160K new positions in June after adding 152K in May.