Poland Keeps Monetary Policy Unchanged

The National Bank of Poland lowered its benchmark interest rate by 25bps to 3.75% at its March meeting, its first rate cut of the year and aligning with market expectations, while signaling that future decisions will depend on upcoming developments. The move brings the policy rate to its lowest level since March 2022. Despite growing concerns over the Middle East conflict, which has driven up global oil and natural gas prices, the central bank pointed to improved March inflation projections. Annual headline inflation fell to 2.2% in January and has remained within the bank’s target range of 1.5–3.5% since July 2025. Still, the NBP flagged upside risks to the inflation outlook, with expansionary fiscal policy, strong demand, and robust wage growth adding to the increase in energy prices. Poland’s economy continued to expand steadily throughout 2025. GDP grew by 4% year-on-year in the fourth quarter, marking the strongest pace of growth since the third quarter of 2022.

The National Bank of Poland kept its main interest rate unchanged at 4% in February, as expected, extending a pause for a second month as policymakers wait for new macroeconomic forecasts before considering further easing. The decision matched market expectations, though views were split, with some analysts expecting a 25 basis point cut. Officials cited the lack of fresh inflation data and limited new information since the previous meeting. A new inflation projection will be published in March, allowing a clearer assessment of whether the recent disinflation trend is sustainable. Inflation slowed to 2.4% in December, near the midpoint of the central bank’s 1.5% to 3.5% target range, while final inflation figures for January and February will also be released in March following changes to the statistical basket.

The National Bank of Poland held its benchmark interest rate at 4% at its first meeting of 2026, pausing the cumulative 175 basis points of rate cuts implemented in six steps last year. Annual inflation eased to 2.4% in December 2025, its lowest level since April 2024, slightly below the NBP’s 2.5% ±1 percentage point target range. However, the central bank noted that it remains to be seen whether the decline in inflation is sustainable over the longer term. Incoming data suggest that Poland’s GDP growth in Q4 2025 likely remained close to Q3 levels, despite a slowdown in retail sales, industrial output, and construction. Labour market indicators pointed to slower wage growth and a decline in enterprise-sector employment. Against this backdrop, the Monetary Policy Council kept NBP interest rates unchanged, noting that future policy adjustments will depend on incoming data on inflation and economic activity.