MNI NBP WATCH: Policy Rate Held, Data Points To July Cut

The National Bank of Poland left key interest rates unchanged on Wednesday, but with GDP growth and inflation both down, a return to easing after May's 50bps cut in the reference rate to 5.25% looks likely in July. (See MNI NBP WATCH: Ref Rate Hold At 5.25% Expected, July In Focus)

Poland’s economy grew by 3.2% in Q1 2025 Q1, compared with 3.4% in the final quarter of 2024, according to Statistics Poland’s preliminary estimate, while CPI inflation fell 0.2% to 4.1% from April to May.

Lower inflation was driven principally by the continued decline of fuel prices, the NBP said in a statement, adding that inflation net of food and energy prices also decreased slightly, though services price growth remains elevated.

The statement did not mention the expected disinflation effect of Energy Regulatory Office (URE) changes to the gas price tariffs due from July 1, but instead referred to earlier increases in the administered energy prices “together with continuously heightened annual growth in prices of food and non-alcoholic beverages” that translate into the still-elevated level of CPI inflation.  

Nevertheless, the NBP’s March projection, which said there was a 50% chance that annual price growth would be between 4.1-5.7% this year, is clearly due for revision. 

July’s exercise is therefore likely to show inflation already at or close-to the 2.5% +/-1% target, though we wait for governor Glapinski’s press conference for further details as to his and the MPC’s thinking on the outlook for inflation and rates.