Poland’s Central Bank Unexpectedly Cuts Rates Amid Geopolitical Tensions and High Oil Prices

The National Bank of Poland (NBP) unexpectedly lowered borrowing costs, signaling strong confidence that domestic inflation will remain contained. Governor Adam Glapiński stated that inflation remains near the target despite the ongoing conflict in Iran and global oil prices exceeding $100 per barrel. This decision contradicts previous market expectations that rate cuts were off the table due to potential energy shocks. The NBP's move marks a significant divergence from the hawkish trends seen in regional peers like Hungary. While global geopolitical tensions persist, the central bank believes domestic price pressures are sufficiently stabilized to allow for easing. This rate cut is expected to put downward pressure on the Polish Zloty (PLN) while potentially providing a boost to the WIG20 equity index.