Central Bank leaves rates unchanged in June

Policy rate remains at four-year low: At its meeting on 1–2 June, the Central Bank of Poland (NBP) decided to keep the reference rate at 3.75%, in line with market expectations and mirroring May’s pause. The rate remains at its lowest level since March 2022.

Bank remains in wait-and-see mode: The NBP decided against a cut due to elevated geopolitical uncertainty amid the Iran war; the Bank remained on hold to assess the impact of recent commodity price shocks on the economy. Meanwhile, the NBP chose not to hike as inflation declined in May and GDP growth decelerated in Q1.

NBP likely to remain on hold until year-end: The NBP stated that its future decisions will depend on how geopolitical conflict and shifts in fiscal policy affect domestic inflation and economic growth. The vast majority of our panelists sees the reference rate ending 2026 at its current level, as average inflation is likely to exceed the 2.5% target midpoint this year as a whole. Potential rate hikes by the ECB and higher-for-longer energy prices pose upside risks to the policy rate. The NBP should reconvene on 7–8 July.

Panelist insight: ING analysts commented: “A less tight labor market, somewhat slower economic growth, and an inflation outlook showing limited pass-through from the energy shock provide the central bank with sufficient comfort to maintain a wait-and-see stance. CPI inflation may return to the NBP’s target as early as 2Q27, as the impact of elevated oil prices is expected to remain contained and unlikely to spread broadly across the consumer basket. We continue to expect policymakers to keep rates on hold, with the next move likely to be a cut, although its timing appears some way off.”

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