Today, the Monetary Policy Council (MPC) lowered interest rates by 25 basis points, reducing the reference rate to 5%. This move sharply contrasts with recent comments from President Glapiński, who, after the June pause, spoke about further monetary easing with greater caution. At the same time, the decision came as a significant surprise to the market, which was reflected in the zloty’s exchange rates. The EUR/PLN pair rose significantly above 4.26, reaching its highest level since June 24.
July is a special month for the National Bank of Poland (NBP) because the MPC’s decision was accompanied by the bank’s new forecasts. While the GDP growth projections have not been revised significantly since March (predicting slightly weaker growth in 2025 and somewhat stronger growth in 2026-2027), there have been considerable changes in inflation forecasts. The decline in price pressures is highlighted as a key factor behind today’s decision to cut interest rates. Although the bank notes risks such as fiscal policy shape, changes in demand pressures, and labor market conditions, it emphasizes that CPI inflation is expected to fall below the upper limit of the inflation target band in the coming months.
Attention now shifts to tomorrow’s press conference, which may help better outline expectations for the bank’s future moves. We have little doubt that the rate cuts will continue; however, the pace of reductions and whether the next cut will occur already at the upcoming September meeting remain uncertain. Of particular interest may be President Glapiński’s comments on the global situation, regulated energy prices, and fiscal policy, which he has previously singled out among the key risks to the bank’s monetary policy outlook.
Author: Michał Jóźwiak – Analyst at Ebury
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Source: https://ceo.com.pl/nowe-projekcje-nbp-i-zaskakujaca-decyzja-rpp-co-dalej-55751
