MNI NBP WATCH: Rates Held; Inflation, Growth Outlooks Revised
MNI (LONDON) - The National Bank of Poland held its policy at 5.75% on Thursday, and narrowed its near-term inflation projection while raising the outlook over the medium-term.
“In the coming quarters inflation will remain elevated, and in the case of a further increase in energy prices at the beginning of 2025, it will rise,” the Bank said in a statement.
Inflation should return to the NBP’s medium-term target when the effects of the energy price increase fade and wage growth slows, the Bank said - with the impact of higher energy prices on inflation expectations is an uncertainty factor.
October’s CPI inflation of 5.0%, a 0.1% gain on September, was mainly a result of increases in energy prices, as well as “albeit to a lesser extent” higher food and non-alcoholic beverages, the NBP said, with wage growth still running at a “high level.”
Annual CPI inflation will be in the 3.6–3.7% range in 2024 according to November’s assessment, compared with the 3.1-4.3% seen in July. Prices are then expected to grow by 4.2– 6.6% in 2025 - versus 3.9 – 6.6%, and 1.4 – 4.1% in 2026, compared with the 1.3 – 4.1% seen in the summer.
Having judged in October that “consumer price growth is also constrained by the appreciation of the zloty exchange rate, which is consistent with the fundamentals of the Polish economy,” the NBP said that “earlier appreciation of the zloty exchange rate acts in the same direction.”
Reference to the Polish economy’s continuing gradual recovery was replaced with a note that incoming data suggests Q3 annual GDP growth “could have been somewhat lower than in 2024 Q2.” (See MNI EM NBP WATCH: CPI, Core Point To First Cut In Q2 2025)
Annual GDP growth is now forecast at 2.3–3.1% this year versus the 2.3–3.7% projected in July. Next year’s growth forecast also slipped from 2.8–4.8% to 2.4–4.3%, and from 1.9–4.3% to 1.7–4.0% in 2026.