Poland's currency has been drifting lower, but policymaker Przemyslaw Litwiniuk isn't ringing alarm bells. He attributed the slide mostly to global forces, pointing to a sturdier dollar after the Federal Reserve's hike and a jump in fuel prices. "This movement stems primarily from global factors, above all the strengthening of the dollar following the Federal Reserve's rate hike," he told Bloomberg. He added, "I believe the zloty remains strong, and there are sectors - particularly exporters - that are benefiting from this shift."
From the end of May, the zloty has fallen 3.1% against the euro, and Bloomberg data show the four-month downdraft is the longest since 2018. Litwiniuk tied the move to outside drivers like the stronger greenback and pricier fuel. He noted the weaker currency does nudge up import costs, but said it hasn't been a "major factor" in Monetary Policy Council discussions.
Officials talking up a currency is usually about managing expectations. Market Briefs covers FX free every weekday.
The 10-member council has kept the benchmark at 3.75% since March, even though a surge in fuel prices has lifted inflation above the policymakers' target range. The central bank's target is 2.5% with a tolerance range of plus or minus 1 percentage point. Litwiniuk's base case is no rate changes for the rest of this year.
Should the new forecasts, expected next month, show inflation staying greater than 3.5% during 2027's latter half, he said policymakers would likely consider tightening later in 2026. He described the MPC's stance as "wait-and-see," in contrast to derivatives traders positioning for hikes after the ECB and the Fed tightened policy last month.
Litwiniuk highlighted potential second round effects and 2027 energy prices as the biggest inflation risks. He also flagged geopolitics as a persistent unknown, saying, "We are facing a protracted and burdensome period of uncertainty stemming from the conflict in the Middle East, which is testing the patience of central banks." For everyday budgets, here's the practical read: a somewhat weaker zloty can make imported goods a bit pricier, while a steady rate path suggests borrowing costs may not shift much near term.
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