MNI NBP Review - Sep 2025: A Dove In Fiscal Cage

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Executive Summary

• The NBP ‘adjusted’ the key rate 25bp lower as the inflation picture improved.
• Governor Glapiński said that loose fiscal policy was the main inflationary risk.
• Further cuts this year are possible but contingent on the materialisation of risks.

The National Bank of Poland (NBP) reduced the reference rate by 25bp amid a decline in CPI inflation, but signalled concern about risks ahead, which warrant a cautious and conservative approach to further monetary easing. Governor Adam Glapiński used his press conference to persuade his audience that the Monetary Policy Council (MPC) will tread lightly, as the pace of economic recovery, labour market tightness, and loose fiscal policy pose upside risks to the inflation outlook, describing the latter as a key factor limiting room for more aggressive cuts. He added that the evolution of energy prices remains uncertain, clouding the outlook for monetary policy. Despite placing much emphasis on inflationary risks, the Governor left the door ajar for potential further interest-rate cuts this year but indicated that decisions will be data-dependent.