NBP Rate Caution Seen Pressuring Polish Zloty Amid Global Dollar Retreat Commerzbank analyst Tatha Ghose forecasts Poland's central bank will hold its base rate at 3.75 percent, warning that masked inflation risks keep the Zloty vulnerable, while US political shifts lift gold and crypto. Financial markets are closely tracking the upcoming monetary policy gathering of the National Bank of Poland (NBP), where analyst consensus overwhelmingly expects the benchmark base rate to remain steady at 3.75 percent. Market participants anticipate that the key market moving insights will emerge not from the interest rate announcement itself, but from the subsequent press conference and the central bank's newly released inflation and growth projections. Tatha Ghose of Commerzbank cautions that holding rates steady under current macroeconomic conditions risks leaving Polish policymakers behind the inflation curve, thereby keeping the Polish Zloty under prolonged downward pressure. Temporary Fiscal Relief Masks Core Inflation Pressures Poland witnessed a notable deceleration in headline consumer price inflation, which slipped from 4.1 percent year on year in September to 3.5 percent in October. This moderation has served as the central justification for postponing further interest rate increases. However, economic analysis indicates that this slowdown does not reflect genuine disinflation across the broader economy. Instead, the downward shift was produced entirely by direct administrative interventions in energy taxation enacted by the Polish government. In an effort to shield consumers, authorities lowered the value added tax on motor fuel from 23 percent to 8 percent while simultaneously reducing excise duties to the minimum thresholds permitted by the European Union. These fiscal measures caused passenger fuel prices to plummet by 9.7 percent month on month. Because this relief stems from fiscal tax adjustments rather than market driven equilibrium, economists argue that monetary authorities should not treat it as a structural decline in inflationary momentum. Monetary Policy Trapped by Regulated Uncertainties Tatha Ghose emphasizes that central banking strategy must look beyond transient administrative interventions and concentrate on the earlier run up in core inflation that exceeded the central bank's target. Underlying cost factors in the Polish economy remain rigid, characterized by elevated wholesale energy costs, persistent commodity market strains, and an exceptionally tight domestic labor market. Furthermore, the administrative fuel subsidies that dampened October price gauges are officially slated to lapse at the conclusion of the year. While the NBP's forthcoming forecast update should illuminate baseline economic trajectories, it cannot eliminate the fundamental ambiguities surrounding potential government extensions of price caps, changes in regulated utility tariffs, or broader political developments. Commerzbank argues that maintaining a passive stance amid these lingering risks leaves Poland's monetary policy trajectory vulnerable to falling behind the curve, exposing the Zloty to sustained market selling. US Midterm Results Weigh on the Dollar and Bond Yields Currency trading on Wednesday reflected substantial macro volatility triggered by initial vote counting in the United States midterm elections. The rising likelihood of institutional gridlock in Washington, highlighted by Democratic performances in both the House of Representatives and the Senate, generated considerable political hesitation among international investors. This shifting landscape induced a move toward defensive holdings, triggering an additional downward leg in US Treasury bond yields that diluted market wagers on Federal Reserve monetary tightening. Under these conditions, the AUD/USD pair held above its recent two week trough, hovering near 0.6965 during the Wednesday Asian session, though upside potential was constrained by the Reserve Bank of Australia's less aggressive policy stance. Simultaneously, USD/JPY experienced notable selling pressure, falling below the 158.00 threshold as the broader US Dollar slumped to a fresh one month low amid deteriorating yield differentials and geopolitical hesitation. Gold Nears Milestone Levels While Cryptocurrencies Advance A weakening Greenback and falling yields provided strong upward momentum for precious metals. Gold continued its steady intraday ascent during early European trading, posting successive weekly peaks and nearing the $4,050 per ounce mark. The combination of legislative friction in Washington and softer sovereign bond yields enhanced the appeal of non yielding bullion as an alternative store of value. Concurrently, broader risk appetite gained traction across digital asset markets on Wednesday. Bitcoin traded above $78,000, signaling a constructive technical recovery across the cryptocurrency spectrum. Ethereum followed this supportive trajectory, sustaining levels above $2,300, while Ripple changed hands above $1.28, cementing two straight trading sessions of positive price appreciation. Spotlight Shifts to US Private Employment Data Market attention is now pivoting toward forthcoming economic indicators from the United States, headlined by the private payroll report compiled by the Automatic Data Processing Research Institute. Consensus expectations project a measured deceleration in hiring trends across corporate America. The ADP Employment Change benchmark is forecast to show 69,000 private sector positions added during October, representing a moderation from the 90,000 payrolls recorded in the September release. What this means for you Central bank rate decisions and macroeconomic volatility are driving notable price shifts across international currencies and precious metals. • Forex and Travelers: The Polish Zloty faces persistent downside pressure due to policy hesitations. Individuals dealing in European trade or travel should monitor regional exchange rate volatility closely. • Precious Metals Buyers: Spot gold is pushing toward the $4,050 mark as sovereign bond yields retreat. Retail buyers and precious metal investors may see elevated prices in domestic markets. • Digital Asset Traders: Bitcoin sustaining levels above $78,000 reinforces an improving market risk profile. Cryptocurrency investors could experience higher valuations as Ethereum and Ripple also post gains. • Global Economic Indicators: Decelerating private employment growth in the US could shape future rate paths. Broader dollar weakness typically provides support to emerging market assets and cross-border liquidity. Why this happened A combination of temporary fiscal interventions in Poland and political shifts in the United States drove widespread market adjustments. • Fiscal Fuel Tax Interventions: The Polish government lowered fuel VAT from 23 percent to 8 percent and reduced excise duties to minimum European Union levels. These measures triggered a 9.7 percent month-on-month drop in passenger fuel, artificially pulling headline inflation down to 3.5 percent. • Central Bank Policy Inaction: The National Bank of Poland opted to hold rates at 3.75 percent rather than raising them against core price risks. Analysts note that ignoring persistent commodity and labor pressures risks keeping the central bank behind the inflation curve. • US Political Gridlock: Early midterm election counts indicating Democratic legislative strength created the prospect of political paralysis in Washington. This outcome weighed heavily on US Treasury yields and prompted a broad-based retreat in the US Dollar. Questions & Answers 1. What is the market consensus regarding the National Bank of Poland's base rate? Analysts almost unanimously forecast that the NBP will leave its base rate unchanged at 3.75 percent. 2. What caused the apparent drop in Poland's October inflation reading? Government cuts to fuel VAT from 23% to 8% and excise duties dropped passenger fuel by 9.7% monthly, bringing headline inflation to 3.5%. 3. Why is the Polish Zloty expected to remain under selling pressure? Commerzbank warns that failing to counter underlying inflation while relying on temporary tax cuts risks leaving NBP policy behind the curve. 4. What drove the sharp retreat in the US Dollar? Heightened political uncertainty from early US midterm election counts and falling Treasury bond yields put heavy pressure on the currency. 5. How did gold and Bitcoin perform during Wednesday's trading? Gold advanced close to $4,050 per ounce, while Bitcoin traded above $78,000 supported by improving broader risk appetite. 6. What are the expectations for October's US private employment figures? The ADP report is projected to show 69,000 new private jobs in October, slowing down from 90,000 reported in September. https://trendkia.com/en/market/national-bank-of-poland-ke-snbhavita-byaja-dara-thaharava-se-zloty-para-dabava-ke-snketa-56460 TrendKia — Har trend, sabse pehle.