MNI NBP WATCH: Inflation Beat Points To 25BP Rate Cut

The National Bank of Poland is likely to cut its reference rate by a quarter point to 4.25% on Wednesday, following better-expected-inflation data and in line with Governor Adam Glapinski’s stated intention to stick with convention and leave monetary policy untouched in December. (See MNI EM NBP WATCH: Cut Comes Despite Unchanged Core Inflation)

The Monetary Policy Council has sounded consistently hawkish in recent months, but is unlikely to pause the easing cycle - which began in July - after headline inflation fell from 2.9% in September to 2.8% in October, a downside surprise versus expectations of around 3%. The central bank targets inflation of 2.5%.

With strong but moderating pay growth and no sign of the spike in energy prices referred to in successive MPC decision statements, the reference rate could see another 25bp reduction by February, though January’s meeting may be too soon. (See MNI EM INTERVIEW: Pay Too High For NBP Target - PBR's Jankowiak)

Additional easing of some 50bps is then possible over the course of next year, taking the reference rate to a probable terminal level around 3.75%

November's meeting will also see the publication of the first macroeconomic projections since July, when headline inflation was seen at 3.9% in 2025, 3.1% in 2026, and 2.4% in 2027, with 2028 now on the NBP's forecast horizon.