NBP: MPC's Duda Doesn't Rule Out Rate Cut Next Week But Would Prefer To Wait

MPC's Iwona Duda told Business Insider that Polish central bankers may approve another rate cut next week, if their assessment of recent economic developments and short-term projections is positive, even as she would personally prefer to wait until it becomes clear that inflation has eased sustainably to the +2.5% Y/Y +/- 1pp target.

• Duda played down July data showing that headline CPI inflation moved back to the NBP's tolerance band. She noted that it 'brings joy' but was driven by base effects, hence it is too early to talk about a durable return to the target. In her view, 'only the subsequent readings of both [headline] CPI and core inflation] will confirm this.'
• The policymaker pointed to 'plenty of risk factors', including loose fiscal policy (with the optimisation of policy mix requiring higher interest rates), uncertainty around energy prices, elevated services inflation (boosted by administrative fees) and a slow moderation of wage growth.
• Duda said that she did not rule out cutting interest rates in the near term as 'there is also a group of factors supporting such a decision'. In her view, there is no risk of a sudden acceleration of growth momentum, PPI inflation is still negative, the downtrend in wage growth has been maintained and the planned minimum wage hike and public-sector wage hikes should not have too much of an inflationary effect.
• In a later part of the interview, Duda said that she expected headline inflation to print at +2.9% Y/Y in August and she sees room for one more 25bp cut this year, which is 'almost certain'. Despite her earlier comments, she added that she could not rule out a cut already in September. She refused to chart the likely rate path beyond this year, stressing that the MPC is not in a monetary policy cycle and only delivers adjustments on a meeting-by-meeting basis.
• As a reminder, MPC's Henryk Wnorowski yesterday forecast a rate cut at next week's meeting, but added that a pause was likely to follow. Wnorowski's and Duda's guidance pointing to just one 25bp rate cut in the coming months is more hawkish than market consensus. These conservative comments come right ahead of the Cabinet's discussion on the 2026 budget today and flash August CPI data tomorrow.