Economy 4 min read By Alice Ashford
National Bank of Poland holds rates at 3.75% amid inflation risks
Poland’s central bank kept its main interest rate at 3.75% for another month, balancing slowing growth against persistent price pressures and uncertainty over energy costs.
The National Bank of Poland has left its benchmark interest rate unchanged at 3.75%, holding policy steady as policymakers weigh persistent inflation risks against an uneven economic recovery. The decision, announced at the close of the Monetary Policy Council’s latest meeting, extends a pause that has now lasted several months and signals that the central bank remains cautious about easing too quickly.
In its statement, the bank pointed to a mixed picture: headline inflation has moderated from the peaks seen in previous years, but underlying price pressures remain sticky. Energy costs, food prices, and wage growth continue to feed through to consumer prices, keeping the bank’s target of 2.5% plus or minus one percentage point out of reach for now. The council judged that maintaining the current level of restriction was the safest course, particularly with global commodity markets still volatile and the zloty’s exchange rate adding an extra layer of uncertainty to the inflation outlook.
The decision was widely anticipated by financial markets. Most economists had expected no change at this meeting, and the bank’s communication gave little hint of a near-term shift. Attention now turns to the central bank’s next projections, due in the coming months, which will offer a clearer read on whether the current pause will stretch into the second half of the year or give way to rate cuts before winter.
Poland’s economy has been growing at a modest pace, supported by household consumption and a resilient labour market, but the recovery has been uneven across sectors. Industry has struggled with weak external demand, particularly from Germany, Poland’s largest trading partner, while the construction sector has shown signs of life after a prolonged downturn. The bank’s own commentary acknowledged these crosscurrents, noting that economic activity remains below its potential and that the pace of recovery will depend heavily on how quickly inflation converges to target.
The hold also reflects a broader regional trend. Central European central banks have been navigating a delicate balance between supporting growth and defending their inflation targets, with some having already begun easing while others, like Poland, prefer to wait for more conclusive data. The National Bank of Poland has repeatedly stressed that it will not hesitate to act if inflation expectations become unanchored, but it has also signalled that it sees no urgency to move in either direction at present.
For borrowers, the decision means mortgage rates and business lending costs will remain at their current levels for at least another month. Polish households, many of whom took on variable-rate loans during the cheap-money era, have been watching the central bank closely for any sign of relief. The bank’s cautious stance suggests that relief is not imminent, though analysts note that the longer inflation stays on a downward path, the stronger the case becomes for a cut later in the year.
The next scheduled meeting of the Monetary Policy Council will be closely watched for any change in tone. For now, the message from Warsaw is one of patience: rates stay where they are, and the data will decide what comes next.
