Central Bank leaves rates unchanged in April

Policy rate remains at four-year low: At its meeting on 8–9 April, the Central Bank of Poland (NBP) decided to keep the reference rate at 3.75%, in line with market expectations, following a 25 basis point cut in March. The rate remains at its lowest level since March 2022.

Bank opts for prudence: Having reduced rates in March, the Central Bank decided against another cut due to the Iran war, which rattled global energy markets and sent domestic inflation above the midpoint of the 1.5–3.5% target range. Meanwhile, the NBP did not hike due to signs of potential weakness in the economy, including declining construction and falling employment in the private sector, coupled with elevated uncertainty around global commodity prices.

NBP likely to remain on hold until year-end: The NBP stated that future decisions will depend on the impact of geopolitical conflict and fiscal policy shifts on inflation and domestic economic growth. Most of our panelists see the rate ending 2026 at its current level, as average inflation is likely to exceed the target midpoint. The rest of our panelists see room for further monetary policy easing by December. Potential rate hikes by the ECB and higher-for-longer energy prices pose upside risks to the policy rate. The NBP should reconvene on 5-6 May.

Panelist insight: Erste Bank’s Jakub Cery said: “Overall, we think the Polish central bank will keep rates unchanged until the end of this year, and possibly even until the end of 2027, as the inflation profile has worsened due to the war in the Middle East. Our current forecasts suggest that even if war does not escalate further, inflation rate will not return to the 2.5% target before the end of next year.”

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