The National Bank of Poland (NBP) has kept its reference rate unchanged at 3.75% following the April Monetary Policy Council (MPC) meeting, continuing a neutral policy stance after a 25 basis point rate cut in March [1]. ING economists expect the NBP to maintain this position, with rate hikes considered unlikely under current conditions [1]. The MPC's decision was influenced by global fuel price increases resulting from supply constraints caused by the conflict in the Middle East, as well as domestic factors such as regulatory and tax decisions aimed at mitigating the impact of these shocks [1].
The NBP governor emphasized that inflation in the coming months will be shaped by energy commodity prices (oil, natural gas) and domestic regulatory actions, including excise duty and VAT adjustments on fuels [1]. The Council will also monitor how higher fuel prices affect the prices of other goods [1]. Future policy decisions will depend on changes in commodity prices, the geopolitical situation, fiscal policy, fuel price regulations, GDP, and wage dynamics, all of which are considered risk factors [1].
ING's baseline scenario assumes the Lower Fuel Prices programme (CPN) will continue until the end of July 2024, with average annual inflation projected at 3.2%. This is higher than previous estimates of roughly 2% before the outbreak of war in the Persian Gulf and 2.3% in the NBP's March projection [1]. As a result, ING expects the MPC to keep interest rates unchanged at least until the end of 2026, with a low probability of rate hikes [1].
The press release following the April MPC meeting was described as brief and neutral, reinforcing the central bank's wait-and-see approach as it assesses the impact of ongoing geopolitical and commodity market developments on inflation and economic activity [1].
CONCLUSION
Poland's central bank is expected to maintain its neutral stance and keep interest rates steady amid rising global fuel prices and geopolitical uncertainty. ING projects inflation to be higher than previously estimated, but sees a low likelihood of rate hikes, with rates likely to remain unchanged until at least the end of 2026. The market takeaway is stability for the Zloty and a cautious approach by policymakers.