The National Bank of Poland held its principal interest rate steady at 3.75% on Wednesday, maintaining a cautious monetary stance as signs point to upward pressure on inflation.
The Monetary Policy Council's decision was in line with expectations from all 29 economists polled by Reuters, who anticipated no change in September. The move leaves the main policy rate at its current level as policymakers weigh recent price developments.
Inflation accelerated to an annual rate of 3.4% in August, surpassing analyst forecasts and creeping toward the upper boundary of the central bank's 1.5% to 3.5% target band. That rise in consumer prices has become a central consideration in the council's deliberations.
Rafal Benecki, chief economist at ING in Poland, said the outlook has become less certain on the downside and more tilted to higher inflation. He observed that "the balance of risks to inflation has shifted upwards," citing rising oil prices, geopolitical tensions, and the prospect of higher energy costs in 2027 as reasons for a cautious approach.
Benecki further projected that inflation could reach 4% in the coming months and indicated his expectation that interest rates will remain at current levels through the next several quarters. That view underscores a reluctance to ease monetary policy while upside risks persist.
Analysts monitoring fiscal developments noted that a loose fiscal path could also limit the central bank's room to cut rates. The draft budget for 2027 shows the general government deficit-to-GDP ratio at 7.1% next year, compared with 7.3% in 2025, a profile that analysts say may discourage any near-term monetary easing.
Policymakers therefore face a mix of rising commodity and energy costs and a fiscal stance that together support a cautious posture on interest rates, even as the council keeps borrowing costs unchanged for now.
Conclusion - The National Bank of Poland's decision to keep the benchmark rate at 3.75% reflects concerns that recent inflation momentum, driven in part by higher commodity and energy prices and reinforced by fiscal deficits, could push inflation back above the central bank's target range.