The National Bank of Poland is widely expected to resume cutting interest rates on Wednesday, according to a Reuters poll, as inflation eases within the central bank’s target range. Of the 30 analysts surveyed, 26 predicted a 25-basis-point reduction to 4.75%, while four anticipated the rate would stay unchanged at 5%.

Figure 1. Poland’s Central Bank Expected to Cut Key Interest Rate by 0.25% on Wednesday – Reuters Poll.

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The central bank surprised markets by lowering its key rate by 25 basis points in July, following a 50-basis-point cut in May. Prior to these moves, the rate had been held steady at 5.75% since autumn 2023. Figure 1 shows Poland’s Central Bank Expected to Cut Key Interest Rate by 0.25% on Wednesday – Reuters Poll.

After the July rate cut, NBP Governor Adam Glapinski stated that it did not mark the beginning of a policy-easing cycle, though he left open the possibility of another reduction in September. A preliminary report on Friday showed August consumer price growth at 2.8% year-on-year, slightly below expectations, following a 3.1% rise in July. Both figures fall within the NBP’s inflation target range of 2.5% ± 1 percentage point.

Deutsche Bank analysts wrote that they anticipate the MPC will implement a 25 basis-point rate cut, bringing the policy rate down to 4.75%. They noted that recent communication from the NBP, along with current inflation trends, supports this expectation.

However, they cautioned that rising fiscal risks—highlighted by the 2026 draft budget confirmed this week—and ongoing uncertainty surrounding future electricity prices mean that a pause in easing next week cannot be entirely ruled out.

On Friday, Poland raised its 2025 budget deficit forecast while projecting a modest decline for 2026, as high defence, welfare, and debt-servicing costs continue to limit efforts to reduce the shortfall.

EY analyst Maciej Stefanski, who had predicted steady rates on Wednesday, described the decision as a near toss-up. He noted, “Although further monetary easing would be justified given inflation remains close to target, uncertainty over regulated energy prices in Q4 could lead the Council to postpone cuts for at least a month.”

In August, Polish President Karol Nawrocki vetoed a bill that would have extended the freeze, as it was tied to relaxed rules for building onshore wind farms. He described the measure as a government attempt at “blackmail.”

The EY analyst noted that rate setters were placing too much emphasis on power prices and added that the government’s looser-than-expected fiscal policy also supported keeping rates unchanged.

Poland’s central bank, the National Bank of Poland (NBP), is widely expected to cut its key interest rate by 25 basis points (0.25%) in its upcoming meeting on Wednesday.

Interest rate cuts make borrowing cheaper for businesses and consumers, potentially boosting economic growth. They also influence inflation and the value of the zloty (Poland’s currency).

What’s Driving the Cut:

Recent inflation data suggests prices are stabilizing near the central bank’s target. Combined with weaker economic growth, policymakers see room to ease monetary policy.

Risks and Uncertainties:

Despite expectations for a cut, rising fiscal pressures and uncertainty over regulated electricity prices could cause the NBP to pause rate easing. Analysts warn that external factors may influence the final decision.

Market Impact:

A rate cut would likely support equities and credit markets but could weaken the zloty. Investors and businesses are closely watching both the NBP’s decision and its forward guidance for 2025–2026.

Source: Reuters

Cite this article:

Priyadharshini S (2025), Poland’s Central Bank Likely to Slash Key Rate by 25 Basis Points on Wednesday: Reuters Poll, AnaTechMaz, pp. 127