MNI NBP WATCH: Data Points To 50Bp Cut As Inflation Falls

The National Bank of Poland is expected to ease key interest rates for the first time in more than 18 months on Wednesday, with recent dovish data raising the chances of a 50-basis-point cut. (See MNI EM NBP WATCH: Dovish Signals Point To Rate Cut This Year)

April’s marginally below-expectations inflation rate of 4.2% (after 4.9% in March), and an expected decline in core inflation, further confirms the downward trend in consumer prices that analysts - and, increasingly - members of the NBP’s Monetary Policy Council have pointed to for some weeks.

Having remained hawkish throughout Q1, prospects of a May cut to the reference rate, which has been held at 5.75% since October 2023, grew as policymakers admitted incoming data from the first months of 2025 “signal that inflation in subsequent quarters may be lower than previously expected.”

Expectations for a cut have built together with further signs of slower wage growth and weaker economic activity, as fears of a major rebound in energy prices recede and the macro environment continues to look fragile.

Fiscal policy remains an upside risk to the inflation outlook. Should the NBP - as markets expect - opt for a half-point, rather than a 25bp cut, it may also sound a note of caution over future moves, offering little forward guidance beyond the need to remain data-dependent.