Poland's central bank left its principal interest rate unchanged at 3.75% on Thursday, a decision that aligned with the expectations of all 30 analysts in a recent survey. The Monetary Policy Council's move follows a 25 basis point reduction implemented last month, which set the benchmark rate at its current level.
Since May 2025 the central bank has reduced borrowing costs by a total of two percentage points. That easing path included the most recent cut, made in March, after which Governor Adam Glapinski identified the war in Iran as the greatest inflation risk facing Poland. At the time, he indicated that if geopolitical tensions eased quickly further rate cuts could be possible.
However, a number of policymakers on the council have signalled more recently that additional easing is unlikely in the near term while the conflict persists. The council's decision to hold rates reflects this reassessment as well as the evolving inflation picture.
Piotr Bielski, head of the economic analysis department at Santander Bank Polska, said the choice to keep rates steady was unsurprising given recent developments. "The decision to keep rates on hold was quite obvious, given that a spike in commodity prices raised uncertainty about the inflation outlook," he said.
Inflation in Poland accelerated to 3.0% year-on-year in March, up from 2.1% in February. The increase was driven by higher fuel prices, which were themselves linked to the Middle East conflict. Those price moves have complicated the central bank's task of returning inflation to target.
Bielski expressed the view that inflation is unlikely to return to the central bank's 2.5% target before the end of 2027, even when accounting for government interventions such as tax cuts and price caps at petrol stations. Based on that outlook he expects the central bank to maintain the policy rate at current levels through the remainder of 2027.
The Monetary Policy Council will publish a formal statement on the meeting's outcome. Governor Glapinski is scheduled to hold a news conference at 1300 GMT to outline the council's assessment and explain the decision.
Contextual note - The council's hold on rates comes against a backdrop of elevated commodity costs and geopolitical uncertainty that have fed into consumer prices. Policymakers have signalled a cautious stance, balancing the prior easing cycle with new upside risks to inflation.