National Bank Of Poland To Hold Rates As Inflation Pressures Remain Contained

The NBP is likely to leave rates at 3.75% on 4 November as underlying inflation pressures remain contained. Attention will focus on the new inflation projection and energy price risks, but we expect rates to stay unchanged through the end of 2026 before 50bp of hikes in 1Q27

The National Bank of Poland (NBP) is expected to keep interest rates unchanged on Wednesday, with the reference rate remaining at 3.75%. Although preliminary data showed October inflation at the upper limit of the tolerance band around the central bank’s target, the composition of price growth does not suggest that inflationary pressures are becoming more widespread. Core inflation excluding food and energy likely fell below 3%, giving the Monetary Policy Council (MP) room to “wait and see” and continue to monitor domestic and global developments before taking further action.

The new macroeconomic projection will be an important part of the discussion at the Council’s November meeting. If it points to elevated inflation around the turn of 2027 and 2028, the NBP may adopt a more hawkish tone. The scale of regulated-price increases from the beginning of 2027 – particularly for gas – will also be important, as these could lift the entire inflation path. However, government representatives have already signalled possible intervention in the gas market, on top of the existing price cap on gasoline prices.

Our core inflation model presents a benign core inflation path when the energy shock expires somewhere in 2027, with the main anchor being contained wage growth. Labour market conditions are looser than during the pandemic-driven inflation shock and following Russia’s invasion of Ukraine in 2022. The current government is also pursuing a tighter wage policy, raising the minimum wage by just 3% in 2027 for the second consecutive year, compared with increases of around 20% in 2023-24. With wage growth forecast to remain below 6% in 2027, the risk of second-round effects in Poland remains limited. This contrasts with the Czech economy, where minimum wages and public-sector pay are rising more quickly.

That is why we expect interest rates to remain unchanged until the end of 2026.

We see hikes in 1Q27, but later and in smaller magnitude than expected by the yield curve. Our rationale is that a prolonged energy crisis raises the risk that elevated inflation will become entrenched and the NBP will decide to provide a kind of insurance tightening.

Further rate hikes by major central banks could also prompt the NBP to signal its readiness to address inflation risks. At the same time, the risk of PLN weakening is rather secondary, given the low pass-through from PLN to inflation (10% PLN weakening adds 0.2pp to inflation).

Our central forecast remains for no rate change in November or December 2026, followed by a cumulative 50bp of rate hikes in 1Q27.