MNI NBP WATCH: Dec Meeting Live As Data Suggests 25BP Cut

The National Bank of Poland could cut interest rates by 25 basis points for a fifth consecutive meeting on Wednesday, as headline inflation has fallen below the central bank’s 2.5% target amid easing wage and core inflationary pressures. (See MNI EM NBP WATCH: Interest Rates Cut 25Bps On Slower Price Growth)

A quarter-point cut to 4.0% appears increasingly likely this week, after November CPI surprised to the downside, at 2.4%, helped by a decline in the pace of food price growth and less-than-exepected energy price growth.

Core inflation, net of food and energy, is now also edging downwards, having fallen from September’s 3.2% to 3.0% in October (further confirming the pattern begun in June), supported by improvements in services sector pricing.

MODERATING WAGE GROWTH

Wage growth should continue its moderating path, as recognised by the Monetary Policy Council in November’s statement, which referred to “a gradual slowdown,” though reference to the inflationary dangers of elevated pay rises was retained.

As detailed in November’s Inflation Report (based on data available before October 15) inflation was expected to end the year at 3.7%, and was projected to be 2.9% next year- levels broadly consistent with governor Adam Glapinski’s suggestion of a terminal rate of 3.5-4.0%.

However, in light of recent data both projections, and the probably end-point of interest rate cuts, MPC members may have revised their expectations downwards somewhat, with more now tending towards the middle or lower-end of that range by mid-2026.