MNI NBP WATCH: Rates Held; Inflation, Growth Revised Upwards
MNI (LONDON) - The National Bank of Poland left key interest rates unchanged as expected on Wednesday, saying that consumer price inflation was likely to remain markedly above target in 2025 and in 2026 to stay above the level foreseen in the last set of macroeconomic projections in November. (See MNI EM NBP WATCH: Rate Hold; Projections To Give Cut Timing Clue)
The NBP attributed the rise in January’s CPI inflation - to 5.3% - mainly to rising energy costs, and in particular the partial unfreezing of prices from July last year, as well as to higher natural gas costs. Services prices and wages are still increasing rapidly, it said, with the reference rate kept at 5.75%.
Inflation is now seen ranging from 4.1 – 5.7% in 2025, compared with 4.2 – 6.6% in November’s projection round. In 2026 it is seen between 2.0 – 4.8%, versus 1.4 – 4.1%, and between 1.1 – 3.9% in 2027.
The growth outlook also shifted upwards, from 2.9 – 4.6% in 2025, compared to 2.4 – 4.3% in November’s projections, and to 1.9 – 4.0% in 2026, compared to 1.7 – 4.0%. Growth is likely to be from 1.1 – 3.5% in 2027.
Unemployment remains low, though employment in the enterprise sector ticked down in January 2025 compared with the first month of 2024, the NBP said. However wage growth should decline gradually, helping inflation return to target over the medium term, it added.
“In the Council’s assessment, inflation this year will be markedly above the NBP inflation target, driven by the effects of the already introduced increases in energy prices, rises in excise duties and administered services prices, as well as the further unfreezing of energy prices in the second half of 2025,” an NBP statement said.
“In the coming quarters, core inflation will probably also continue to be elevated, amid a further economic recovery with a marked increase in domestic demand,” it added.
The statement provided no guidance as to future rates moves. Governor Adam Glapinski is likely to face questions over the timing of a first rate cut in the cycle at Thursday’s press conference.