MNI NBP WATCH: CPI, Core Point To First Cut In Q2 2025
MNI (LONDON) - The National Bank of Poland is expected to leave key interest rates unchanged on Wednesday, with the recent uptick in annual inflation adding weight to Governor Adam Glapinksi’s October assertion that easing will likely begin in Q2 2025. (See MNI EM NBP WATCH: Rates Held As Energy, Wages Push Up Prices)
Until then, the NBPs policy rate looks set to stay at 5.75%. Headline inflation accelerated from 4.3% in August to 4.9% in September and 5.0% in October, driven by food and fuel prices, as expansionary fiscal policy and recent zloty weakness add to existing upward price pressures.
The NBP’s macroeconomic projections are expected to show weaker growth, linked especially to the slowdown in German demand, with the medium-term outlook for inflation also expected to be revised down. But uncertainty around the future of the government’s energy price cap means better insight may come in the next round of projections in March.
Labour markets and pay gains remain strong, and with core inflation still stuck at more than 4% it may be some time before the Monetary Policy Committee will be able to make good on recent dovish pronouncements, with Joanna Tyrowicz - a dissenting MPC voice - arguing for keeping rates restrictive beyond the second half of next year. (See MNI EM INTERVIEW: NBP Rate Cut Talk Premature – MPC’s Tyrowicz)