MNI NBP WATCH: Interest Rates Cut 25Bps On Slower Price Growth

The National Bank of Poland cut key interest rates by 25 basis points as expected on Wednesday, to leave the reference rate at 4.25% amid lower food price growth, slowing pay rises and a softer labour market. (See MNI EM NBP WATCH: Inflation Beat Points To 25BP Rate Cut)

"Taking into account a decline in inflation and an improved inflation outlook for the coming quarters, in the Council’s assessment, it became justified to adjust the level of the NBP interest rates," the Bank said in a statement.

Annual CPI inflation fell from 2.9% in September to 2.8% in October, the NBP said, adding that core inflation had likely also fallen, though services price growth remains elevated.

"Further decisions of the Council will depend on incoming information regarding prospects for inflation and economic activity. Fiscal policy, recovery of demand in the economy and elevated wage growth remain risk factors for low inflation. Uncertainty stems also from the level of energy prices and inflation developments abroad," the Bank said.

Inflation is seen averaging 3.6–3.7% in 2025 (compared with 3.5–4.4% in the July 2025 exercise); 1.9–4.0% in 2026 (versus 1.7–4.5%), and 1.1–4.1% in 2027 (previously 0.9–3.8%), the NBP said.

Polish GDP is now expected to grow by 3.1–3.8% this year (2.9–4.3% in July); 2.7-4.6% in 2026 ( versus 2.1–4.1%), and 1.5–3.7% in 2027 (from 1.3–3.7%).