The National Bank of Poland, known as NBP, is anticipated to keep its benchmark reference rate firmly at 3.75% during its policy meeting on 4 November, with borrowing costs projected to stay flat through the conclusion of 2026. According to core inflation modelling by ING economists Rafal Benecki and Adam Antoniak, underlying price pressures across the domestic economy remain well contained, characterized by negligible second-round wage impulses. Nevertheless, they anticipate cumulative rate increases of 50 basis points arriving in the first quarter of 2027 as a defensive safeguard against persistent energy-driven inflation risks.
Inflation Trajectory and Labour Market Conditions
The core inflation framework mapped out by the economists outlines a relatively mild inflation path as energy supply disruptions and price shocks gradually fade around 2027. A critical stabilizing anchor in this outlook is moderated wage expansion. Current conditions across the labour market are notably looser compared to the intense inflation shock seen during the pandemic and following Russia's invasion of Ukraine in 2022.
Furthermore, government authorities are pursuing a restrained compensation approach. The state is raising the national minimum wage by just 3% in 2027 for the second consecutive year. That modest adjustment represents a sharp deceleration from the aggressive minimum pay hikes of around 20% implemented across 2023 and 2024, curbing the risk of wage-price spirals that could otherwise challenge monetary stability.
Crucial Projections for the Monetary Policy Council
Fresh macroeconomic projections are scheduled to serve as an essential cornerstone of discussions during the Monetary Policy Council's November gathering. Should these official economic updates indicate sticky, elevated inflation lingering around the transition between 2027 and 2028, the central bank could alter its communication and strike a distinctly hawkish tone.
In addition to broader economic trends, the magnitude of administered utility adjustments from the start of 2027, especially concerning natural gas prices, will carry significant weight. Marked upward revisions in these regulated tariffs could shift the baseline trajectory for headline inflation across the nation. For now, the baseline outlook expects complete policy inaction through November and December 2026, followed by 50 basis points of cumulative rate increases during the opening quarter of 2027.
Australian Dollar Drops Following Narrow RBA Decision
In broader foreign exchange trading, the Australian Dollar declined against the US Dollar (AUD/USD) for a second straight trading session on Tuesday. The pair slid to a two-week trough during Asian market hours following the Reserve Bank of Australia's widely anticipated decision to hike policy rates by 25 basis points.
However, the monetary decision revealed significant internal division among policymakers. Three council members voted against the tightening step, preferring to leave the benchmark cash rate untouched at 4.60%. This lack of unity dampened market bets on future policy tightening by the RBA. Combined with a marginally resilient US currency, the softened tightening outlook exerted consistent downward pressure on the currency pair.
Yen Dynamics and Geopolitical Backdrop
Meanwhile, the US Dollar retreated against the Japanese Yen (USD/JPY) during Asian trading on Tuesday, surrendering part of its run toward 158.00 recorded the prior session. The Greenback traded with a subdued bias amid diplomatic hopes regarding Iran and caution preceding the US midterm elections.
Simultaneously, active market sensitivity to potential currency interventions provided a floor under the Japanese Yen. However, ongoing ambiguity regarding the timing of the next Bank of Japan rate adjustment prevented the currency from staging an extended advance. This push-and-pull dynamic has kept USD/JPY confined within an established trading corridor, urging caution among institutional traders looking for clean trend breakouts.
Commodity Movements and Energy Price Rebound
In the metals space, gold (XAU/USD) retreated on Tuesday as crude oil markets rebounded. The bounce in energy benchmarks followed news concerning a US military strike on Iran's Qeshm Island. Against this backdrop, spot bullion traded around $3,909 per ounce, marking a drop of 0.93% during the session as capital rotated across risk assets.
Cryptocurrencies and the Dollar Index
Digital currencies experienced notable selling pressure on Tuesday. Bitcoin dropped down to $76,566, touching a six-week trough. Ethereum similarly traded under persistent selling pressure, consolidating within a narrow technical support band, while Ripple remained perched just above the $1.25 threshold.
The US Dollar Index managed to climb off its session lows while staying parked beneath the 102.00 handle within its established band. The American currency drew underlying support from escalating geopolitical friction around Iran alongside firmer energy prices, though looming domestic political uncertainties in the United States continued to cap broader upside momentum.
