The Monetary Policy Council (RPP) of Poland has decided to keep interest rates unchanged, in line with market expectations and previous guidance. The next potential opportunity for a rate cut will come in July, when the latest inflation projections are released.
During its May meeting, the RPP implemented its first rate cut since autumn 2023, lowering rates by 50 basis points. Since then, Council members have repeatedly emphasized the need for more time and data before making further decisions on rate reductions.
The next rate cut—likely to occur in July or September—is expected to mark the beginning of a new easing cycle. Inflation in May fell to 4.1% year-over-year, and indications suggest the updated inflation path will show a faster return to target compared to the March forecast.
“The most likely scenario is a rate cut in July, but it will be a more modest 25 basis points, not 50 as in May,” said Michał Stajniak, Deputy Director of the Analysis Department at XTB, in an interview with MarketNews24.
Emerging Risks Could Slow the Pace of Easing
Some risk factors may prompt the RPP to proceed with caution. One concern is the recent rebound in wage growth, which jumped to 9.3% y/y in April from 7.7% y/y in March.
Another major risk is fiscal uncertainty in Poland. If the government increases spending without raising taxes, it could lead to higher debt levels and inflationary pressure. NBP President Adam Glapiński has repeatedly emphasized that expansive fiscal policy will be a key factor in future monetary decisions.
Additionally, the end of the current 90-day “truce” in U.S. trade wars, spearheaded by former President Donald Trump, could elevate global risk again. The RPP noted in its post-meeting statement that “the outlook for global activity and inflation remains uncertain, including due to changes in trade policy,” referencing the potentially negative impact of U.S. tariff measures on global economic growth.
“The market currently prices in one rate cut over the next three months, and sees the benchmark rate at 4.0% within the next 12 months. That implies five 25-basis-point cuts from the current level,” explained Stajniak. “There’s even room to bring rates down to around 3.5%.”
July Inflation Projections Likely to Shape Policy
The easing cycle is likely to begin in July, when the RPP reviews the latest inflation forecasts from the National Bank of Poland (NBP). The July projection is expected to incorporate the newly approved gas tariff by the Energy Regulatory Office, which will likely help bring down short-term inflation expectations.
Following the RPP’s decision, the Polish złoty remained stable but has been weakening since the start of the week due to political uncertainty and questions over cooperation between the government and a potentially oppositional president.
Source:
ManagerPlus – RPP waits, but market already prices in 125 bps in cuts by mid-2026
