Inflation in Poland has fallen back within the National Bank of Poland’s (NBP) target, but it is far from certain that the Monetary Policy Council (RPP) will cut interest rates in the first week of September. The Council may wait for details of the 2026 budget and the final decision on the minimum wage. Adding to the uncertainty are factors such as commodity prices and currency exchange rates. Overall, however, the trend points toward lower borrowing costs.
“Future inflation is shaped by many factors beyond the control of the domestic economy, politicians, or even the central bank. I am thinking here of political factors. A scenario in which global price dynamics slow rather than accelerate is more likely,” said Dr. Jarosław Janecki, lecturer at the Warsaw School of Economics (SGH) and chairman of the Polish Economic Association Council, in an interview with Newseria. “Of course, we can imagine a sudden spike in oil prices or an event that sharply destabilizes the Polish zloty, weakening it. This is possible, but less likely in the coming months.”
With the summer break over, the RPP will resume decisions on September 3, either adjusting interest rates or leaving them unchanged. Economists remain divided, though most lean toward another 25-basis-point cut, following the 75-basis-point reductions in May and July. The July decision, however, came as a surprise and was seen by some as an acceleration of a move originally expected in September.
Skeptics of a September cut point to several issues. First, July’s inflation reading of 3.1%—one percentage point below June—was still slightly higher than most forecasts, which expected a sharper decline. Economists at PKO BP, Poland’s largest bank, argue this is insufficient justification for a September cut. BNP Paribas experts take a similar view, projecting one cut per quarter, which would push the next move to October at the earliest. By November, the Council will also have a new inflation report to consider.
“One important factor the RPP may weigh in September is the shape of next year’s budget law,” noted Dr. Janecki. “Fiscal policy influences inflation, and much will depend on the size of the deficit and the minimum wage increase. If the hike is modest, in line with current announcements and close to forecasted inflation for next year, the risks will be limited. But since full budget details will not yet be available, the Council may prefer to wait. There is definitely room for rate cuts—the question is when and by how much.”
The main drivers of inflation are fuel prices, which affect production and transport costs; the zloty’s exchange rate against currencies used for imports; and consumer demand. The first two factors have supported disinflation over the past year, as the zloty strengthened against the dollar and oil prices fell. Consumption data, however, have been mixed. Retail sales beat forecasts in April and July, but disappointed in February and June. Wage growth has shown similar volatility: in April and June, pay increases were stronger than expected—an argument against cuts—yet in July, growth slowed to 7.6%, below forecasts.
“Wage dynamics matter for inflation because they influence disposable income and can fuel higher prices through stronger demand. At around 8%, current wage growth is not dangerous for future inflation,” assessed Dr. Janecki. “Still, some RPP members suggest that 6% year-on-year growth would be ideal for setting interest rates. It’s not the only factor, but in recent months they’ve often cited it. The latest data suggest wage pressure is easing, largely because this year’s spike was driven by a sharp rise in the minimum wage, which will not be repeated in 2026.”
