The May meeting of Poland’s Monetary Policy Council will take place in an environment of relative economic stability, but also amid growing uncertainty in global markets. After an earlier interest rate cut in 2026, the MPC is now in a phase of assessing the effects of its monetary policy. Its key task remains keeping inflation close to the National Bank of Poland’s target of 2.5%, with a permitted deviation of one percentage point in either direction.
Inflation in Poland has slowed noticeably in recent months and remains close to the central bank’s target. This means that price pressure in the economy is much lower than in previous years. At the same time, some categories, especially services, are still seeing relatively faster price growth, suggesting that the process of returning inflation to a stable level has not yet been fully completed.
The overall economic situation remains relatively good. Economic growth is moderate, supported by household consumption and a gradual recovery in investment. The labour market remains stable, while unemployment is low. At the same time, wage growth has started to stabilise, reducing the risk of renewed inflationary pressure.
Recent developments in the financial market point to greater caution among investors. Rising IRS rates and yields on some debt instruments suggest that market participants are no longer as confident about further interest rate cuts in the near term. Expectations regarding future monetary policy have become more varied, with some investors assuming that the current level of rates may be maintained for a longer period.
An additional source of uncertainty is the geopolitical situation in the Middle East, particularly tensions related to Iran. The conflict is affecting energy commodity prices, especially crude oil, which has risen recently. Higher energy prices could again increase inflationary pressure in the future, making them an important risk factor from the central bank’s perspective.
Given the current macroeconomic conditions and the situation in financial markets, the most likely scenario for the May meeting is that interest rates will remain unchanged. Such a decision would allow the Council to assess the impact of earlier measures on the economy and monitor inflation developments in the coming months.
Further interest rate cuts remain possible, but they are unlikely to come immediately. The MPC may adopt a more cautious approach, especially in view of the risk of higher energy prices and uncertainty in international markets. Interest rate increases, on the other hand, appear unlikely, as the current level of inflation does not indicate a need to tighten monetary policy again.
If the MPC decides to leave interest rates unchanged, the reaction in financial markets may be limited, as this scenario is largely expected by investors. Stable interest rates would mean broadly unchanged financing costs for households and businesses.
For the currency market, no change in monetary policy may support relative stability in the zloty exchange rate. The bond market, meanwhile, is likely to continue reacting mainly to shifts in global sentiment and inflation expectations.
The May meeting of the Monetary Policy Council is therefore unlikely to bring any significant changes in interest rates. Stable inflation and moderate economic growth support the case for maintaining the current monetary policy stance. At the same time, external factors such as geopolitical tensions and volatility in commodity prices mean that the MPC may remain cautious and postpone any further decisions on interest rates until the coming months.
