MNI INTERVIEW: Pay Gains Key To Price Outlook - NBP's Tyrowicz

The National Bank of Poland must remain attentive to inflation risks coming from service sector price growth and higher wage demands, Monetary Policy Council member Joanna Tyrowicz told MNI.

The NBP held the reference rate at 3.75% this month amid geopolitical uncertainty and as inflation increased from 3.0% in March to 3.2%, mainly due to fuel prices. 

So far the price shock from the war with Iran has been “surprisingly timid,” Tyrowicz said, but her view of the appropriate policy stance is unchanged in calling for a 100 basis-point hike.

"While I used to be concerned because the demand side of the economy looked very much like a rerun of 2021, this time the shock is so much smaller. While I might in time consider a slightly higher stance than my current 4.75%, I do not expect the rise to be substantial, she said, noting while that price caps mean the effect of dearer fuel on headline CPI is “not particularly informative," PPI data indicates the boost to inflation is "really a blip" relative to the previous inflationary episode.

Still, services inflation has picked up, due mostly to more expensive plane tickets and telecom charges, and should that spread into other areas a “strong monetary policy response” will be needed, Tyrowicz said.

“As long as services inflation remains contained, I’m not worried. Even if the government does stop subsidising energy prices and CPI mechanically picks up because of that, that should not drive policy decisions.”

What might force the central bank’s hand in the coming months is pay growth, she said. This has slowed in real terms over the last two months, but is likely to return to its previous trajectory later in the year, Tyrowicz said. (See MNI EM INTERVIEW: NBP Hike Risks Grow As War Drags On - Zarzecki)

PAY GROWTH

“At some point renegotiation of wages will resume, as currently it may have been hindered by certain mitigation policies introduced by the government. Given what's also happening on the demand side of the labour market, I do expect real wage growth to resume at levels inconsistent with the inflation target,” she said.

“My reading is that the wage growth was driven primarily not by higher prices, as much as by demographic and labour-market factors, including a rather profound reallocation of labour resources across sectors and business models. Hence, I expect real wage growth to return soon.”

Tyrowicz cautioned against reading too much into first quarter GDP data - which showed a slowdown from growth of 4.1% in Q4 2025 to 3.4% - in light of an exceptionally cold winter that hit both business activity and consumption unusually hard.

“We also have a much more stimulatory fiscal policy. I would therefore be surprised if we see weaker GDP numbers than the forecasts from before the beginning of the events in the Middle East,” she said.

Favourable developments in food prices and the increasing penetration of Chinese goods helped lower inflation last year, but the same may not be true in 2026, Tyrowicz said.

“It remains to be determined if the return of inflation in China has consequences for export prices. This is particularly relevant as of June, when the 2025 base effect from substantial U.S. dollar depreciation begins to fade away.” (See MNI INTERVIEW: NBP May Hike This Year- Ex-MPC's Hardt)