EM FX: Policy holds shape CLP, PLN, PEN, TRY – BBH

Elias Haddad from Brown Brothers Harriman anticipates that Chile, Poland, Peru, and Türkiye will maintain their policy interest rates unchanged during upcoming meetings. Haddad notes that the Chilean Peso (CLP) could strengthen due to copper prices, while the Polish Zloty (PLN) might benefit from positive real rates and a favorable external balance.

The Peruvian Sol (PEN) may underperform if real rates remain negative, and Türkiye's tight monetary policy is deemed necessary as disinflation remains stagnant at 30% year-on-year. Chile’s central bank is anticipated to keep its policy rate on hold at 4.50% for the fifth consecutive meeting. The national bank is well-positioned to maintain rates for an extended period, with two-year inflation expectations nearly reaching its 3% target.

The US dollar is expected to trade at a significant discount against the Chilean Peso due to the surge in copper prices. The National Bank of Poland (NBP) is also expected to keep its policy rate at 3.75% for a fifth straight meeting. Since July 2025, the NBP has cut rates by 200 basis points, with the swaps curve forecasting 75 basis points of tightening to 4.50% within the next twelve months as inflation rises.

Poland’s positive real rates and favorable balance of payments continue to support the PLN. Peru’s central bank (BCRP) is also expected to keep rates unchanged at 4.25% for a 12th consecutive meeting. If the BCRP maintains a relaxed stance on inflation, the Peruvian Sol (PEN) may underperform due to negative real rates persisting.

Türkiye’s central bank (CBRT) is widely expected to hold rates at 37.00% for a fifth straight meeting, as the disinflationary process stalls around 30% year-on-year, justifying continued tight monetary policy.