Poland Interest Rate

Central Bank leaves rates unchanged in May

Policy rate remains at four-year low: At its meeting on 5–6 May, the Central Bank of Poland (NBP) decided to keep the reference rate at 3.75%, in line with market expectations and extending April’s pause. The rate remains at its lowest level since March 2022.

Bank remains in wait-and-see mode: The NBP decided against a cut due to a worsening outlook for inflation amid the Iran war; consumer price growth came in above the midpoint of the NBP’s 1.5–3.5% target range in April. Meanwhile, the NBP chose not to hike due to signs of potential weakness in the economy, with the Bank assessing that annual GDP growth likely slowed in Q1.

NBP likely to remain on hold until year-end: The NBP stated that its future decisions will depend on how geopolitical conflict and shifts in fiscal policy affect domestic inflation and economic growth. Most of our panelists see the reference rate ending 2026 at its current level, as average inflation is likely to exceed the target midpoint this year as a whole. The rest of our panelists see room for further monetary policy easing by December, though NBP’s President Adam Glapinski acknowledged at a press briefing following the May decision that the likelihood of a rate hike has risen since the Bank’s meeting in April. Potential rate hikes by the ECB and higher-for-longer energy prices pose upside risks to the policy rate. The NBP should reconvene on 1–2 June.

Panelist insight: ING’s Rafal Benecki and Adam Antoniak commented: “NBP rates are likely to remain unchanged in the coming months. A key milestone will be the July macroeconomic projection, which will shape the outlook for inflation and growth. How long inflation stays above 3.5% remains central to the MPC’s reaction function. We still think the CPI shock should prove temporary, although recent developments in the Middle East raise the risk of persistently higher oil and gas prices, with still limited pass-through to the rest of the CPI basket.”

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