Economic news

• MONETARY POLICY: Poland's Monetary Policy Council members signal cautious, but slightly differing, prospects for future interest rates. Henryk Wnorowski sees room for a modest cut in September and expects the main rate to end 2025 in the 4% range, citing sticky inflation and loose fiscal policy as reasons for gradual 25 bp steps. Ireneusz Dąbrowski supports starting cuts in Q4 and envisions a drop to 3.50% by 2026, contingent on slower wage growth. Iwona Duda treats recent July cuts as a conditional response, not a full easing cycle, though a 100 bp reduction this year remains on the table. Deputy NBP Governor Marta Kightley underscores fiscal looseness and labor market risks as reasons for a gradual approach, with a September cut expected of up to 50 bp.
• INFLATION: NBP First Deputy Governor Marta Kightley stated that inflation is likely to dip below 3% in July and remain near the target in the medium term linking to the likely cuts early in the fourth quarter. However, she highlighted energy prices, fiscal policy, labor market conditions, and overall economic activity as key risks. The NBP’s July projection outlines a gradual disinflation path, with CPI expected at 3.9% in 2025, 3.1% in 2026, and 2.4% in 2027.
• DEBT: Poland’s Ministry of Finance sold 51-week T-bills worth PLN 2.45 billion with a yield of 4.35%, amid strong demand of nearly PLN 7 billion, adding PLN 45 million in a supplementary sale. The government sold bonds totaling PLN 10 billion, plus PLN 800 million in an additional auction, with demand reaching approximately PLN 16.3 billion. Following these sales, the Ministry reported that 80% of this year’s gross borrowing needs have now been financed.
• TARIFFS: U.S. President Donald Trump announced that 30% tariffs on imports from the EU will take effect on August 1, raising fears of a transatlantic trade war. While the EU has extended the suspension of its retaliatory actions, it is preparing countermeasures should the talks fail. European leaders are divided - Germany and Italy favors continued negotiations while France urges a tougher stance, but all agree on defending EU interests. Economist Paul Krugman criticized Trump’s move as unjustified, noting that U.S. goods already enjoy near-free access to the EU market, and warned that such tariffs harm both sides economically.

Financial market update

Liquidity on the domestic market is at a low holiday-season level. The same applies to the calendar of data releases and political events. The zloty weakened last week, mainly in response to the strengthening U.S. dollar (an old but often reliable correlation). EUR/PLN moved from 4.245 to 4.27, and USD/PLN from 3.60 to 3.65. This week, global factors will continue to dominate — the second inflation reading for June (the most important item on this week's calendar) is unlikely to attract much market attention. This suggests a higher probability of further zloty weakening rather than strengthening. For EUR/PLN, this means a move toward 4.28–4.29, where the nearest resistance level lies. Meanwhile, domestic government bonds have found a new equilibrium after the recent rate cut by the Monetary Policy Council (in the range of 5.3–5.4% for the 10-year bond), and in our opinion, they will remain near that level for a long time, possibly until the end of the summer.