Poland's monetary policy needs to be cautious: Glapinski

Poland's monetary policy needs to be cautious: Glapinski

Poland’s Monetary Policy Remains Cautious Amid Inflationary Progress

The National Bank of Poland (NBP) has maintained a cautious approach to monetary policy in early 2026, with Governor Adam Glapiński emphasizing the need for careful decision-making as inflation trends stabilize. At the February Monetary Policy Council (MPC) meeting, rates were left unchanged at 4.00%, reflecting the central bank's focus on assessing the impact of prior cuts and monitoring evolving economic indicators.

Inflation has shown consistent progress toward the NBP's target of 2.5% (±1.0 percentage point). Year-on-year inflation fell to 2.4% in December 2025, with further declines expected in early 2026 due to lower electricity tariffs, falling global agricultural prices, and disinflationary pressures in tradable goods and services. Governor Glapiński noted that core inflation is declining, and for the first time in months, he did not highlight inflationary risks, signaling growing confidence in the central bank's trajectory.

Despite this progress, the NBP has adopted a "wait-and-see" stance to evaluate the cumulative effects of 175 basis points of rate cuts in 2025. Glapiński stated that the MPC will prioritize data-driven decisions, with March 2026 positioned as a potential inflection point. Preliminary inflation data for January and updated projections incorporating past rate cuts will inform the Council's next steps. Analysts anticipate a rate cut in March, with the main policy rate potentially reaching 3.25% by year-end, though Glapiński has indicated a preference for a more gradual path, targeting 3.50%.

The central bank's caution is also influenced by structural challenges, including a high budget deficit, which limits the scope for aggressive easing. While the NBP expects inflation to remain within target through 2026, some analysts project consumer price growth could dip closer to the lower bound of 1.5% in certain months, reflecting stronger disinflationary pressures than anticipated.

Overall, Poland's monetary policy remains in a transitional phase, balancing the need to support economic growth with the imperative to maintain inflationary stability. The MPC's next move will hinge on incoming data, with March 2026 likely serving as a pivotal moment for policy direction.