WARSAW (Reuters) -The National Bank of Poland is expected to resume lowering interest rates on Wednesday, a majority of respondents in a Reuters poll said, as inflation falls within the bank’s target range.
The NBP will cut its key rate by 25 basis points to 4.75%, according to 26 of 30 analysts polled, while four expected it to remain steady at 5%.
The bank unexpectedly eased its main rate by 25 basis points in July, after cutting it by 50 basis points in May. It had previously kept the main rate steady at 5.75% since autumn 2023.
Following the July cut, NBP Governor Adam Glapinski said that it was not the start of a policy-easing cycle, though he did not rule out another such move in September.
A flash reading on Friday showed slightly lower-than-expected consumer price growth in August, at 2.8% on the year, after a higher-than-expected reading of 3.1% in July. Both came within the range of NBP’s inflation target of 2.5% plus or minus one percentage point.
“We expect the MPC to deliver a 25bps rate cut to take the policy rate to 4.75%. Recent NBP communication and inflation dynamics data support our view,” Deutsche Bank analysts wrote.
“However, the increase in fiscal risks – as reiterated by the 2026 draft budget confirmed this week – and the ongoing uncertainty on the future of electricity prices, a pause in easing should not be completely ruled out for next week in our view,” they added.
Poland raised its 2025 deficit forecast on Friday, projecting a modest decrease for 2026, as high defence, welfare and debt servicing spending hamper efforts to rein in a budget shortfall.
EY analyst Maciej Stefanski, who forecast steady rates on Wednesday, said the decision was a near toss-up.
“While I believe further monetary easing would be justified given inflation remaining close to target, uncertainty surrounding regulated energy prices in Q4 could persuade the Council to hold off on cuts for at least a month.”
Poland’s electricity price cap for households expires in October and Glapinski has pointed to this as an inflation risk factor.
In August, Polish President Karol Nawrocki vetoed a bill that included an extension of the freeze, but was bundled with easing rules for building onshore wind farms, calling it a government attempt to “blackmail” him.
The EY analyst said rate setters were overemphasizing the power prices. He added that the government’s looser-than-expected fiscal policy was a factor in favour of keeping rates unchanged.
“Nevertheless, even if rates remain unchanged in September, we expect gradual cuts at subsequent meetings, averaging 25 basis points every two months.”
(Reporting by Karol Badohal; Editing by Lisa Shumaker)
