National Bank of Poland: Policy on extended hold – ING

ING economists Rafal Benecki and Adam Antoniak expect the National Bank of Poland (NBP) to keep its reference rate at 3.75% on 4 November and then leave rates unchanged through the end of 2026. Their core inflation model shows contained pressures, with limited wage-driven second-round effects. They forecast cumulative 50bp hikes in 1Q27 as insurance against persistent energy-related inflation risks.

NBP seen steady before 2027 hikes

"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."

"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."

"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."

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

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)