Poland C.Bank: Keeps main interest rate steady at 5.25%

Poland C.Bank: Keeps main interest rate steady at 5.25%

Poland's National Bank of Poland (NBP) has decided to keep its main interest rate unchanged at 5.25% for the second consecutive month, according to a Reuters poll. The decision comes amidst volatile wage dynamics and strong economic growth, with analysts expecting a pause in rate cuts before further easing later this year.

The NBP's decision follows a 50 basis point cut in May, which was the first easing since October 2023. The move was driven by soft inflation readouts and the need to stimulate the economy. However, the central bank's President Adam Glapinski has indicated that the May cut did not mark the beginning of an easing cycle and that a further cut in June was unlikely.

Glapinski's comments have been closely watched by investors, as the upcoming presidential election on Sunday is expected to bring significant political changes. The victory of opposition-backed nationalist Karol Nawrocki is likely to increase tensions with Prime Minister Donald Tusk and potentially curb the appetite for tighter budgets. This political uncertainty could influence the NBP's monetary policy, with analysts predicting a more cautious approach to rate cuts.

The NBP's decision to hold rates steady at 5.25% was supported by nearly all economists polled by Bloomberg. They expect the central bank to keep rates unchanged until at least the end of the year, with further easing possible in the third quarter. The decision was driven by the need to balance the risks of inflation and economic growth, with wage volatility and strong first-quarter growth being key factors.

The NBP's focus on wage volatility and economic growth aligns with its mandate to maintain price stability and support economic activity. The central bank has pointed to the lifting of the government's electricity price cap as an inflation risk, but has also noted that the outlook for headline inflation hinges on the new electricity tariff to be announced later this year.

In conclusion, Poland's central bank has decided to keep its main interest rate steady at 5.25% for the second consecutive month. The decision was driven by volatile wage dynamics, strong economic growth, and political uncertainty. Analysts expect a pause in rate cuts before further easing later this year, with the central bank focusing on maintaining price stability and supporting economic activity.

References:
[1] https://www.reuters.com/markets/europe/polish-central-bank-seen-keeping-rates-steady-wednesday-2025-06-02/
[2] https://www.bloomberg.com/news/articles/2025-06-04/poland-s-central-bank-to-hold-interest-rates-focus-on-glapinski-s-tone