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In line with expectations, the National Bank of Poland cut rates by 25bp, delivering in total 100bp this year, though the Monetary Policy Council see these moves as “adjustments” rather than a “cycle”. Thursday’s press conference by the governor should be less dovish as recent MPC member comments already indicate a lower bias to ease.

In line with our expectations and those of the market, the Monetary Policy Council (MPC) lowered the National Bank of Poland’s (NBP) interest rates by 25 basis points. The reference rate now stands at 4.75%. The post-meeting statement clearly indicates that the rationale behind the rate cut was the decline in inflation. However, the MPC does not mention that it is already close to its target. In our opinion, for now, the Monetary Policy Council is chasing falling inflation with nominal interest rate cuts, but real interest rates are still high (ex-ante over 2%). Currently, the cuts are aimed at avoiding policy tightening.

The overall tone of the Monetary Policy Council's September communiqué is slightly less dovish than in July. In the diagnostic section of the document, it was noted that wage growth in the national economy “remained elevated” in 2Q25, while in July the MPC said wages slowed. Moreover, in the section concerning the outlook for monetary policy, fiscal policy, the recovery in consumer demand, and elevated wage growth were explicitly identified as the main inflationary risks. Previously, the Council had employed more general phrases such as “developments in demand pressure” and “situation in the labour market,” which may be interpreted as a slight tightening of rhetoric compared to July.

September’s policy decision came as no surprise and was widely anticipated. However, tomorrow’s press conference by NBP governor Adam Glapiński may signal a more cautious or hawkish stance from the Council. While the current economic conditions, labour market situation, and outlook for electricity prices do not appear to be generating significant inflationary pressure, the scale of the fiscal imbalance has turned out to be notably greater than previously expected. We expect governor Glapiński to strongly emphasise the potentially pro-inflationary nature of fiscal policy as a factor the Council must take into account in future decisions.

In our view, this implies two things:

1. The MPC is likely to pause in October, with the next discussion on a possible rate cut expected in November, when the Council will review the next inflation projection (which will include, among other things, the stabilisation of electricity prices in 3Q25).
2. The target level for the NBP reference rate, which we had previously assessed at 3.5%, may ultimately prove higher or be reached later than anticipated, due to an adjustment in the policy mix towards a more restrictive monetary stance to offset the expansionary fiscal policy.

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