Poland Holds Key Rate as Expected

The National Bank of Poland held its benchmark interest rate steady at 3.75% during its April meeting, in line with market expectations. The optimism expressed in the previous meeting regarding the conflict in the Middle East has since diminished, with inflation projections now subject to heightened uncertainty and unlikely to return to the NBP's 2.5% target before the end of next year. Headline inflation rose to 3%, its highest level in eight months, up from 2.1% in February, driven largely by a sharp increase in fuel prices, while annual wage growth in the enterprise sector remained unchanged. Economic growth is projected to slow in the first quarter of 2026, reflecting supply-side constraints, from a 4% expansion at the end of 2025. Future decisions will depend on incoming information regarding inflation and economic activity, as the NBP warns of rising global commodity prices, fiscal policy and regulation concerning fuel prices and developments in wage growth.

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.