Poland Holds Rates at 3.75% as 2027 Inflation Forecasts Rise
Key Facts
Poland’s Monetary Policy Council kept its benchmark interest rate at 3.75% at the end of its meeting on November 4, in line with prior expectations and the reading reported by Investing.com for the decision. The hold came as annual inflation eased to 3.5% in October from 4.1% in September, according to data cited by Reuters. But the central bank’s inflation forecasts for 2027 rose from its July projections, putting the price outlook at the top of the factors investors will monitor. The rate remained at its previous level, with no change to borrowing costs in the decision. Daily closing data for the euro-zloty pair also did not support accounts that it rose after the decision.
The decision matched the expectations of 29 of the 33 economists surveyed by Bloomberg, according to Reuters. The remaining minority had forecast a 25-basis-point increase. Calls for tighter policy by some survey participants therefore did not materialize, while the rate remained at 3.75%. The survey result shows that a hold was the scenario favored by most respondents before the decision was announced. Open sources do not attribute to the council a description of its decision as choosing to wait rather than tighten.
Annual inflation eased to 3.5% in October, after reaching 4.1% in September, according to Reuters. The agency attributed the decline to the reinstatement of government caps on fuel prices and also pointed to easing core inflation. The decline provides immediate context for the decision to hold rates, but does not eliminate the risks to the price outlook identified by the Monetary Policy Council. Those risks include fiscal policy and regulatory decisions related to energy prices. The council also cited domestic economic activity and the path of wage growth as factors affecting the inflation outlook.
The central bank raised its forecast range for annual inflation in 2027 to 3.1%–5.3% in its November projections, from 1.5%–4.0% in its July projections, according to a Crédit Agricole analysis. The new range assumes interest rates remain unchanged. Meanwhile, the forecast range for GDP growth in 2027 rose to 1.9%–3.8%, from 1.8%–3.7% in the July projections. This presents a picture of a higher inflation range alongside a slightly higher growth range in next year’s forecasts. The figures remain projections conditional on the assumption of unchanged rates, not realized outcomes.
The euro-zloty pair moved in the opposite direction to accounts that the Polish currency weakened after the decision, according to EL7 daily closing data. The pair closed at 4.41264 on November 3, then at 4.38543 on November 4. The European Central Bank’s daily reference exchange rates also showed 4.4190 zlotys per euro on November 3 and 4.3990 on November 4, a decline of 0.5% in the pair between the two reference rates. The European institution describes these rates as being for information purposes and warns against using them in transactions. Both the closing and reference-rate series also show a fall in the number of zlotys per euro between the two dates, not a rise.
The Monetary Policy Council said future rate decisions would depend on incoming information about the outlook for inflation and economic activity in Poland, according to a Crédit Agricole analysis. This wording puts upcoming price and activity data at the heart of the monetary policy assessment. Among the indicators cited by the council were wage growth and the path of domestic activity. Fiscal policy and decisions on energy prices will also remain among the inflation risks it identified. The source did not specify the date of the next meeting or a preset path for interest rates.