The Monetary Policy Council (RPP) is expected to keep interest rates unchanged at its next meeting. Although Poland’s preliminary inflation reading for June came in clearly below expectations, it is unlikely to be sufficient on its own to justify faster monetary easing. The main argument for caution will be the end of the government’s CPN programme, which had limited fuel price growth in recent months.
According to Statistics Poland’s flash estimate, annual CPI inflation fell to 2.5% in June, from 3.1% in May. Consumer prices also declined by 0.5% month on month. The reading was lower than market expectations and, at first glance, could strengthen expectations of another interest-rate cut.
However, the June data do not yet reflect the full impact of changes in the fuel market. The CPN programme, which included measures such as lower VAT on fuels, reduced excise duty and a mechanism aimed at limiting retail prices, ended at the close of June. Its expiry is therefore expected to become more visible in the July data and in subsequent months.
For the RPP, this will be an important reason not to react too quickly to a single favourable inflation reading. June’s CPI decline could be partly reversed once fuel prices begin to reflect more fully developments in global oil markets and changes in the złoty exchange rate. Even if price increases at petrol stations remain moderate, the Council will want to assess whether the withdrawal of the support measures creates more persistent inflationary pressure in transport, logistics and selected services.
Geopolitical uncertainty is also adding to the risks. The conflict in the Middle East remains one of the key threats to energy and fuel prices. Any disruption to supplies or another rise in oil prices could quickly increase business costs and subsequently be passed on to consumers. The risk of another supply shock may therefore encourage the RPP to remain cautious.
In June, the Council kept the NBP reference rate unchanged at 3.75%. Analysts noted at the time that lower inflation created room to observe the situation more closely, but that risks related to energy and fuel markets continued to limit the scope for rapid monetary easing.
The most likely scenario is therefore that interest rates will remain unchanged, accompanied by a message that the RPP needs more data before making further decisions. The Council is expected to focus particularly on the July inflation reading, fuel prices after the end of the CPN programme, developments in energy markets and the potential impact of geopolitical tensions on inflation expectations.
