MNI INTERVIEW: Pay Too High For NBP Target - PBR's Jankowiak

Poland's wage growth is likely to remain a source of upside inflation risk into 2026 even if it does not pose a threat to competitiveness, the chief economist of a major federation for businesses and managers at some of the country’s largest firms told MNI.

“The pace of the increase in the minimum wage has been much too high in recent years,” Polish Business Roundtable's Janusz Jankowiak said in written responses to questions.  While a planned 3% wage hike in 2026 is seen as “acceptable” in corporate cost terms, “as far as the central bank is concerned, from the point of view of the inflation target, the [overall] rate of wage growth in the economy is still definitely too high.”

The National Bank of Poland cut key interest rates by 25 basis points this month to leave the reference rate at 4.5%, with inflation at 2.9% in August and September. Yet monetary policy is currently having a “neutral” effect on businesses, said Jankowiak, adding, “don’t forget that the MPC is still missing the inflation target.” (See MNI EM NBP WATCH: Cut Comes Despite Unchanged Core Inflation)

Jankowiak would not be drawn on the NBP’s likely terminal rate or when it might be reached - though he noted that market pricing is between 3.25-3.5%. Nor would he comment on NBP Governor Adam Glapinski's recent suggestion that rates could be cut to 4% before a pause in the easing cycle. “I don’t think that comments on Governor Glapinski rhetoric and statements are fruitful. Period,” he said.

With GDP growth set to moderate at 2-3% in real terms - in part due to a greater investment contribution - the balance of risks is tilted to the downside over the medium term, Jankowiak said, though in addition to wages, public spending and indebtedness and loose monetary policy, next year’s introduction of a new EU emissions trading system poses specific upside risks to prices. 

ETS2

“In the case of Poland’s energy-intensive economy, where energy is expensive and comes from unclean sources, ETS2 means a spike in inflation and increased costs for business. Therefore, the introduction of ETS2 should be more graduał and gentler than now,” he said. (See MNI INTERVIEW: Polish Growth Faces Long-Term Price Challenges)

Political risks to the economy are also higher than the EU average, he said, with the message from Poland’s business community to its government being “first of all – do not disturb.”

On the fiscal side, Poland needs to find growth-friendly consolidation worth 200 billion zloty (USD54 billion) if the winners of 2027’s general elections are not to face serious income versus expenditure difficulties, he said.

“You can’t have Irish taxes and Swedish public spending. We have it. That’s the main source of our problems with public finances. Fiscal consolidation is necessary and essential on both sides: income and spending. That means we need an enormous adaptation and political consensus, which takes public finances beyond the scope of the current political dispute: for at least two to three parliamentary and presidential terms. It’s a very difficult matter. But as the example of the Hartz reforms in Germany shows, it’s possible to reach that kind of agreement.”