MNI NBP WATCH: 50BP Rate Cut In First NBP Easing Since 2023

The National Bank of Poland cut key interest rates for the first time since October 2023 on Thursday, reducing its reference rate by 50 basis points to 5.25% and citing lower inflation and lower-than-expected growth.

"Taking into account incoming information, including lower current and forecasted inflation, decreasing wage growth and weaker data on economic activity, in the Council’s assessment, the adjustment of the level of the NBP interest rates became justified," it said in a statement, adding that U.S. dollar depreciation was also a factor. (See MNI EM NBP WATCH: Data Points To 50Bp Cut As Inflation Falls)

The Monetary Policy Council did not offer additional forward guidance, with further decisions dependent on incoming information regarding the prospects for inflation and economic activity.

But it did remove from May's decision statement a reference to the Council judging that "the current level of the NBP interest rates is conducive to meeting the NBP inflation target in the medium term.”

Data suggest that annual economic activity growth in 2025 Q1 was "probably" lower than expected and "somewhat" lower than the 2024 Q4 figure, it continued.

Retail sales and construction and assembly production growth were negative in March, though industrial output rose in annual terms, the statement added.

Services price growth remains elevated, and the future level of administered energy prices and fiscal policy remain sources of uncertainty.

“Uncertainty stems also from inflation developments abroad, following, among others, from changes in trade policies of major economies,” it said.