The December meeting of the Monetary Policy Council (MPC), scheduled for 2–3 December 2025, will take place against a backdrop of increasingly visible inflation stabilization and rising uncertainty surrounding the labour market. The latest economic data paint a mixed picture—one that may push the Council toward caution while still leaving room for further monetary easing, although that scenario now appears less likely than just a few months ago.
The most recent inflation figures show that the disinflationary process continues steadily. CPI inflation in October 2025 reached 2.8% year-on-year, remaining below the 3% threshold. Even more important is the signal coming from core inflation, which has fallen to around 3.0% year-on-year, the lowest level in roughly six years. These indicators suggest that price pressures in the economy have eased significantly and that prices are now growing at a pace consistent with the inflation target. Under normal circumstances, this would provide a strong argument for additional interest rate cuts.
However, signs of deterioration in the labour market are emerging. Previously favourable employment conditions are beginning to weaken, while unemployment indicators show a slow but noticeable increase. Although these levels are not yet alarming, the trend may signal a cooling in economic activity. This both favours cautious rate cuts and simultaneously raises concerns about overstimulating the economy at a moment when its fundamentals are uncertain.
It is worth recalling that at its previous meeting on 4–5 November, the MPC decided to cut interest rates by 0.25 percentage points, bringing the reference rate down to 4.25%. This marked another step in the Council’s monetary easing cycle. That decision may influence the December outcome in two ways.
First, since a cut was made just one month earlier, the Council may prefer to allow more time to assess how the change is transmitted into the economy. Second, although the decline in inflation provides comfort, it does not guarantee that further cuts over a short period are justified.
As a result, the December meeting will most likely serve as a review of the macroeconomic situation rather than a moment for new, decisive actions. The most probable scenario is that interest rates will be kept unchanged at 4.25%. The Council may justify such a pause by citing the need to evaluate the impact of the November cut, monitor end-of-year pricing dynamics, and exercise caution amid emerging labour market concerns.
An alternative scenario cannot be excluded. If the inflation and economic activity data for November prove better than expected (for example, if inflation falls closer to 2.5% and the labour market shows no further deterioration), the MPC may consider another 0.25-point cut. However, this scenario is viewed as less likely, given that the easing cycle has already proceeded faster than many analysts predicted earlier this year.
The tone of the post-meeting statement will be especially important. If the MPC emphasizes the conditionality of future decisions and the limited room for further easing, markets may interpret this as a signal that the rate-cutting cycle is nearing its end. Conversely, if the Council leaves the door wide open to additional cuts, investors may once again price in the possibility of reductions in early 2026.
In summary, the December meeting of the MPC is most likely to end with a pause and interest rates remaining at their current level. While macroeconomic data support the case for further easing, the recent November cut, rising labour-market uncertainty and the fiscal year-end context all argue for caution. The alternative scenario—a 0.25-point cut—remains on the table, but at present it is less likely than a stabilization of monetary policy settings.
